The hottest trends seen from the mergers and acqui

2022-08-23
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Several trends seen from the mergers and acquisitions of chemical giants

several trends seen from the mergers and acquisitions of chemical giants

April 14, 2017

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according to the latest global chemical industry mergers and acquisitions report released by Kearney, global industrial mergers and acquisitions in 2017 will reach a new high, promoting the overall transformation and upgrading of the chemical industry

in 2017, the total potential transactions in the global chemical industry exceeded US $300billion, of which there were four outstanding block transactions, accounting for 75% of the total

the valuation of each of the four large transactions (Dow Chemical DuPont, Bayer Monsanto, China National Chemical Corporation Syngenta, and Praxair Linde) is between us $100 million, twice that of any single transaction in the past 10 years

due to the increasingly stringent review by the regulatory authorities, some Mega mergers and acquisitions in 2016 had to be postponed. Therefore, the total volume of global chemical M & A transactions last year fell for the first time since 2012, lower than that of global chemical industry M & A transactions in 2015

M & A activities in emerging markets, especially in China, have increased rapidly.

regional investment patterns have changed M & A activities in the chemical industry, and this trend will become more and more obvious. Historically, acquirers in the United States and Europe once dominated chemical mergers and acquisitions, while China's share in global chemical mergers and acquisitions has steadily increased, becoming the world's largest initiator of cross-border transactions, accounting for 24% of global chemical mergers and acquisitions

"this phenomenon shows that emerging markets are constantly exploring the path of globalization, entering new markets and expanding, as well as the trend of seeking advanced technologies and applications." Thomasluedi, a partner of Kearney and head of the chemical and energy industry in the Asia Pacific region, said, "We expect this trend to continue, because the integration of China's supply industries such as chemicals, coal and steel is constantly giving birth to larger and more competitive local enterprise giants. These enterprises will then seek an international development strategy based on mergers and acquisitions, so as to realize the globalization of their businesses, build a global supply chain, and accelerate the development of business in the Chinese market."

M & a transformation to a professional and unitary business model

"these large transactions reflect that diversified chemical enterprises will gradually adjust their asset structure and transform to a more professional and unitary business model. On the one hand, investors have significantly increased the valuation of such chemical enterprises, on the other hand, enterprises want to increase market coverage, improve production capacity and efficiency," said Li Jian, global partner of Kearney

"in all value chains, many chemical enterprises are improving the focus of their portfolios to challenge the traditional diversified integrated business model. This trend can be seen from Dow Chemical's merger with DuPont (the two companies split their businesses into three professional sectors after the merger) 。 In addition, PPG's plan to acquire AkzoNobel is easy to verify from one laboratory to another, which also strongly proves that leading chemical enterprises use mergers and acquisitions to change the pattern of the value chain and accelerate the transformation to a professional business model, "Li Jian added

main driving and impeding factors for future mergers and acquisitions

it is understood that more than 80% of chemical industry executives believe that the main driving factor for the continued strong momentum of international mergers and acquisitions is to obtain high gloss black effect. Spray free materials are mainly used in advanced technologies or application technologies such as outer columns, rear-view mirrors, luggage racks, central control panels, grills and spoilers. In contrast, 37% of executives believe that economic volatility is the biggest potential factor hindering the further growth of mergers and acquisitions

"political turbulence factors such as brexit and the U.S. election have further increased market uncertainty, making it difficult for chemical enterprises to predict the changes in the business environment in the next year or two. Despite these uncertainties, economic fundamentals will still support the continued strong momentum of mergers and acquisitions in the chemical industry in the coming year, contributing to the further integration of more chemical industry chains", Shi Derui, President of Greater China of Kearney company, concluded

mergers and acquisitions in 2016

according to statistics, there were 17 transactions in the global chemical industry in 2016, with a scale of more than US $1billion, most of which came from the petrochemical industry and basic chemicals. Among the 10 largest transactions, American companies dominated, including 5 acquirers and 6 target companies from the United States

the common motivations of pressing the button once to stop moving paper include industrial integration, product portfolio reorganization, asset reorganization, etc. Compared with 2015, the number of major transactions to expand the business of special chemicals has decreased, but it is still the main factor to promote transactions

in 2017, in view of the upcoming large-scale transactions, it is expected that the proportion of transaction amount in the field of specialty chemicals and fine chemicals will increase significantly

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