Global chemicals deals insights: Q1 2018

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Executive summary

The beginning of 2018 has been marked by easing fiscal policy, tightening monetary policy, and turbulent trade policy. While changes in fiscal and monetary policy do not pose an immediate risk to economic growth, recent trade disputes could disrupt industry supply chains and in turn impact global GDP. Each of these trends has potential implications for M&A activity in the sector.

Lower corporate taxes will provide industry players with the capital to pursue acquisitions, although it is uncertain whether this will lead to increased M&A activity, as the easing fiscal policy could also benefit prospective sellers. Meanwhile, increasing interest rates would make debt financing more expensive, decrease stock valuations, and give companies with higher liquidity a competitive advantage.

On the trade side, we see conflict arising in several regions of the world. Recent tariffs on steel and aluminum are signs of increasing tension between the US and China. Furthermore, if the US withdraws from NAFTA, we may see an increased level of M&A activity in the North American region as industry players look to rebuild their supply chains.

Key trends/highlights

  • Deal value in Q1 2018 was $24 billion, 27% above last quarter and 17% higher than Q1 2017. In addition, there were 203 deals this quarter, 14% lower than Q1 2017.
  • The average deal size jumped 65% to $227 million this quarter, although this remains 23% lower than the three-year historical average of $297 million.
  • While the majority of deal activity remains in Asia and Oceania, North American acquirers comprised a larger share of the total this quarter.

“With industry transformation megadeals overcoming big regulatory hurdles, private equity buyers deploying dry powder and US tax reform benefiting global chemical giants, chemicals M&A activities will continue rebounding and accelerating. Trade tensions, if prolonged, may also have a profound impact on global chemical supply chains.”

Craig Kocak, US Chemicals Deals Leaders

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Craig Kocak
US Chemicals Deals leader
Tel: +1 (267) 330 2777
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Chris Cardinal
US Chemical Deals Strategy leader
Tel: + 1 (267) 330 1489
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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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