Global chemicals deals insights: Q3 2018

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Executive summary

Global chemicals industry deal activity continued to be robust this quarter with the announcement of two multi-billion dollar Industrial Gases divestitures as critical steps to complete the Praxair/Linde merger. Outside of Industrial Gases, M&A activity remained strong despite sensitive economic factors, such as rising tariffs and NAFTA implications. Interestingly, we started to see the first wave of deals with objectives to institute a plan B in foreign jurisdictions to avoid supply chain disruptions as a result of enforced tariffs.

As larger companies consolidate during 2018, investments were higher this quarter in niche and smaller companies, which subsided the pace of megadeals. Nonetheless, lack of innovation and organic growth of large public chemical companies would likely drive megadeals in the coming quarters. 

Moreover, Specialty Chemicals deals are expected to rebound as companies target pure-play portfolio and divest from non-core assets. For 2019 and the rest of 2018, inexpensive financing and strong economic conditions would strengthen higher deal valuations and push the overall M&A activity.

Key trends/highlights

  • Deal value in Q3 2018 was $30 billion, 12% below the last quarter. The value was more than twice the deal value in Q3 2017. There were 196 deals this quarter, 6% lower than the last quarter.
  • Average deal size for Q3 2018 increased by 25% as compared to two-year historical average of $216.7 million.
  • A $6 billion acquisition in the industrial gas sector in Europe was the only megadeal announced this quarter. The deal accounted for 20% of deal value in Q3 2018.
  • North America as target region leads in terms of deal value which has grown profoundly from last quarter due to multiple multi-billion deals.

“Four $3 billion+ cross-border deals dominated chemicals deals league tables this quarter. We believe this resurgence of cross-border deal making will continue as regional players expand their global footprints to cope with current trade/tariff situations and take advantage of quality assets made available due to antitrust concerns of completing megadeals.”

Craig Kocak, US Chemicals Deals Leader

Contact us

Craig Kocak
US Chemicals Deals leader, PwC US
Tel: +1 (267) 330 2777

Chris Cardinal
US Chemical Deals Strategy leader, PwC US
Tel: + 1 (267) 330 1489

Seamus Jiang
US Deals Managing Director
US China Inbound Deals leader, PwC US
Tel: +1 (267) 330 1862

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