Global chemicals deals insights: Q1 2017

 

Executive summary

M&A activity in the global chemicals industry appears to taper off its 2016 highs with total deal value of $19.8 billion, coming in 57% lower than last quarter and 67% lower than the first quarter of 2016. There were 28 deals announced this period, a 22% decrease compared to same quarter last year. However, with Praxair/Linde ($35B) and ChemChina/Syngenta ($44B) deals excluded, deal activities remained robust as deal value increased by 76% from last quarter and 20% from Q1 2016. A large part of deal value this quarter was driven by DuPont’s asset swap of its Crop Protection business with FMC’s Health & Nutrition business. This is the first significant transaction to address potential concern to obtain the necessary regulatory approval for the pending Dow/DuPont merger.

Megadeals accounted for 77% of the total deal value announced in Q1 2017. The subsequent largest deals include Bain Capital’s $3.2 billion acquisition of Sealed Air’s Diversey Care hygiene & cleaning solutions unit and Tronox’s $2.2 billion acquisition of National Titanium Dioxide Co.’s TiO2 unit. These deals reaffirmed our view of chemical companies’ continued focus on portfolio realignment and divestitures.

Despite China’s economic slowdown and lower demand, the volume and value of transactions remained highest in the Asia & Oceania region. In Europe, M&A activity remains weak due to a low-price environment/exports demand, Brexit and large chemical corporates tied up with pending megadeals.

"Global chemical companies continue realigning their portfolio to enhance shareholder value amid stagnating demand, profitability and growth. Under an increasingly uncertain macro and political environment, we anticipate topline growth and margin improvement through M&A will continue to be a feasible solution for many companies."

Craig Kocak, US Chemicals Deals Leader

Key trends/highlights

  • Global chemicals M&A deal value totaled $19.8 billion this quarter, a 67% and 57% decrease compared to Q1 2016 and Q4 2016, respectively.
  • Transaction volume dropped to 28 deals this quarter. Likewise, average deal size reached $0.7 billion, a 45% decrease from last quarter.
  • DuPont’s asset swap of Crop Protection business with FMC’s Health & Nutrition business was the largest transaction this quarter, representing 18% of the total deal value. A total of seven megadeals accounted for 77% of the total deal value.
  • Specialty chemicals continue to drive M&A volume in the chemicals sector, accounting for 50% of transactions this quarter.
  • The Asia and Oceania region continues to drive M&A activity in the chemicals sector, accounting for 55% of deal value and 64% of deal volume by target region.

For our full report and additional information on the top deals announced for the year, our regional and subsector analyses, and the outlook for this sector, please remember to download our:

Global chemicals M&A deals insights: Q1 2017 update.

Contact us

Craig Kocak
US Chemicals Deals Leader
Tel: +1 (267) 330 2777
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Vijay Sarathy
US Chemicals Strategy Leader
Tel: +1 (617) 794 5926
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Pamela Schlosser
Partner, US Chemicals leader
Tel: +1 (419) 254 2546
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Seamus Jiang
US Deals Managing Director
US China Inbound Deals Leader
Tel: +1 (267) 330 1862
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Marcus Morawietz
Global Chemicals Leader
Tel: +49 69 97 16 74 67
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