Global chemicals deals insights: Q3 2017

Executive summary

As the global chemicals industry continues to perform well under positive macroeconomic factors and steady demand, companies continue to look towards inorganic growth for market and portfolio expansion. Nevertheless, investments this quarter are modest in terms of value when compared to a year ago, displaying a continuous shift towards middle market transactions.

The third quarter of 2017 brought in 20 transactions for a total value of $10.5 billion. Investments continue to concentrate in the specialty chemicals category, which is expected to see increased demand from a strengthening construction sector in North America and end-user industries in developing countries.

While low interest rates and strong cash flows set a backdrop for increased M&A activity, other factors may also influence investments: oil prices are on the rise, natural gas prices are expected to increase in 2018, fertilizer prices remain stable but low due to lower demand, and corporate tax reform remains on the table. We expect companies to continue to invest in M&A as it continues to be an attractive option for improving profitability.

Key trends/highlights

  • Deal value for the first nine months of 2017 was $43.2 billion, 70% lower than the first nine months of last year.
  • There were 78 deals in the first nine months of 2017 a 16% decrease from last year.
  • The average deal size in Q3 was 48% lower than the quarterly average of $1 billion, resulting from a reduction in megadeals.
  • There were five deals greater than $1 billion in Q3 2017 with an aggregate transaction value of $7.2 billion.
  • Specialty Chemicals accounted for 79% of M&A value this quarter.
  • Acquisitions continue to be driven by strategic investors.

“With the completion of a significant megadeal this quarter, focus will now shift to the preplanned carve-outs and the industry realignment that will be triggered thereafter. The completion of this and other megadeals will mark the end of the first phase of a years-long transformation of the chemical industry landscape.”

Vijay Sarathy and Craig Kocak, US Chemicals Strategy and Deals leaders

Contact us

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

Vijay Sarathy
US Chemicals leader
Tel: +1 (617) 794 5926

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

Marcus Morawietz
Global Chemicals leader
Tel: +49 69 97 16 74 67

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