Chemicals Sector Continues to Remain Buoyant

Following our report last month on the $130bn mega-merger between US chemical giants Dow Chemical and DuPont, a new deal has announced the creation of a chemicals giant with a market value of approx $14 billion.  This latest high-profile transaction across the diversified chemicals sector sees companies are striking ever more aggressive deals to find new ways to slash costs and gain greater scale of their segments, typifying the current market trend for companies to cut costs and boost revenue.

In a statement last week, Huntsman Corp and Switzerland’s Clariant AG, a spin off from Sandoz formed in 1995, unveiled this multibillion dollar all-stock cross-border merger that will see Clariant investors controlling about 52 per cent of the combined group, while Huntsman shareholders will own the remainder. According to the statement, the new HuntsmanClariant will have a combined enterprise value of approximately $20 billion.

Clariant has been the subject of endless deal speculation in recent years, with larger rivals such as Germany’s Evonik having considered takeover approaches in the M&A activity-rich sector.

We also share an update on the $43 billion sale of Syngenta to ChemChina, which is anticipated to complete in summer 2017 as financing is in place to close the deal.  First phase growth is anticipated in China, where there is strong opportunity for Syngenta to help strengthen Chinese agriculture using ChemChina’s domestic knowledge and funding to bring technologies to the market.

According to Deloitte, global chemical M&A activity is set to grow throughout 2017, but factors such as protectionism and increasing interest rates will come into play, which may hamper the record activity levels seen in previous years.  Considering global activity, the US market is anticipated to stay buoyant and, in South America, the Brazilian market is recovering steadily.  In Europe, the UK remains an attractive market for strategic and financial buyers.  In Germany and particularly in Switzerland, chemical companies are continuing to focus on acquisition to extend their value chains and fill technology gaps.  In Asia, it is expected that both inbound and outbound mergers in China will increase in 2017 and the strong economic growth in India is set to fuel vibrant chemical M&A activity.

Stay tuned to our blog for industry M&A analysis and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.

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