Chemical compounds is a quarterly analysis of global merger and acquisition (M&A) activity in the chemicals industry. In the report, you'll find an overview of M&A results, significant drivers of these results, and expectations of deal activity in future quarters.
Volume and value of deal activity fell steeply this quarter, continuing a decline that began in the second half of 2011. Responding to concerns over poor first quarter earnings, companies may have shied away from deals to streamline operations and jumpstart earnings growth through organic means. Concerns about the economy and slower economic growth have led to greater investor caution, with activity decelerating in the second half of 2011 and into 2012. Despite these concerns, more assets hitting the selling block and relatively low public valuations could spur buyers to act. If the economy continues to show sluggish improvement and interest rates remain low, we could see an increase in M&A activity as strategic acquirers look to grow through acquisition despite continued uncertainty. Given these possibilities, we remain cautiously optimistic that the deal environment could begin to turn around in 2012.