Chemical compounds: Fourth-quarter 2013 chemical industry mergers and acquisitions analysis

February 2014
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Chemical compounds: Fourth-quarter 2013 chemical industry mergers and acquisitions analysis

At a glance

Improving economic conditions in the US, a quality supply of divested assets, and opportunities from shale gas has supported the fourth quarter’s M&A environment,” said A.J. Scamuffa, US chemicals leader for PwC. “Specialty chemical targets played a major factor in fourth quarter deal value, accounting for five of the six mega deals completed in the final three months of 2013. Buyers have been attracted to targets with higher margins and lower cyclicality, and the specialty market fits that criteria. At the same time, we’re seeing ongoing interest in chemical businesses and assets that have benefited from the ongoing expansion of shale gas, which has decreased raw material and energy costs.

Explore the data

Explore the data

Welcome to Chemical Compounds, PwC's quarterly analysis of merger and acquisition (M&A) activity in the global chemicals sector that provides an overview of the most recent M&A results and our expectations for future deal activity.

Highlights of what this quarter’s analysis revealed:

  • The United States was a driver of the increased fourth-quarter growth: US-based acquirers were involved in one-third of all deals valued at $50 million or more in the fourth quarter. The increased activity may be linked to a relatively strong recovery in the United States and opportunities from shale gas
  • Specialty chemical targets, particularly attractive given their higher margins and lower cyclicality, were significant drivers of the improved mega-deal environment in the fourth quarter
  • European deals activity continued to decline as the economic recovery in the region remained muted. In addition to declines in GDP in many nations, unemployment remained near historic highs for much of the year
  • Prospects are bright for M&A activity in the sector in 2014, with expectations of a continued US recovery and an end to the recession in much of Europe. While volumes are likely to remain close to the 10-year average this year, deal values are likely to remain lower than usual. Why? Acquirers seem to be more risk averse and will probably be less likely to engage in larger, more transformative deals

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