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Four key trends evident in mergers and acquisitions in the chemical industry. According to Korn Ferry’s latest \"Global Chemical Industry M&A Report,\" global industrial M&A activities are set to reach new heights in 2017, driving overall transformation and advancement within the chemical industry. In 2017, there were 4 potential major deals in the global chemical industry. The total value of these potential deals across the industry that year exceeded 300 billion dollars, with 4 of them remaining unfinished – accounting for 75% of the total value. Each of these 4 major deals (Dow Chemical–DuPont, Bayer–Monsanto, Sinopec Group–Syngenta, Praxair–Linde) had a valuation between 40 and 70 billion dollars, which is 2 to 3 times higher than the value of any single deal from the previous 10 years. Due to increasingly strict scrutiny by regulatory authorities, some of the largest M&A deals in 2016 had to be postponed; as a result, the total value of M&A transactions in the global chemicals industry last year saw its first decline since 2012, falling below the level of M&A activity in the global chemicals sector in 2015. M&A activities in emerging markets, particularly in China, have surged suddenly. Regional investment patterns have transformed M&A activities in the chemical industry, and this trend is set to become increasingly prominent. Historically, acquirers from the United States and Europe played a dominant role in chemical sector M&A activities; however, currently China’s share in global chemical M&A transactions is increasing steadily, making it the largest initiator of cross-border deals worldwide, accounting for 24% of such transactions. This trend indicates that emerging markets are constantly seeking ways to enter the global market, expanding their presence there, and seeking advanced techniques and applications. ”Thomas Luedi, partner at Korn Ferry and head of the chemicals and energy industry in Asia-Pacific, said, “We expect this trend to continue, as the consolidation of supply industries such as chemicals, coal, and steel in China continues to give rise to larger and more competitive domestic corporate giants. These companies will then pursue internationalization strategies through mergers and acquisitions in order to globalize their operations, establish global supply chains, and accelerate the development of their business in the Chinese market.” ” M&A is shifting toward a more specialized, focused business model. “These large-scale transactions reflect the fact that diversified chemical companies are gradually adjusting their asset structure to move toward a more specialized and focused business model.” This shift is driven, on the one hand, by investors significantly raising the valuation of such chemical companies, and on the other hand, by the companies’ desire to expand their market presence as well as improve production capacity and efficiency,” said Li Jian, Global Partner at Korn Ferry. “Across various value chains, many chemical companies are increasing the focus on their asset portfolios as a challenge to the traditional diversified, integrated business model. This trend can be seen in Dow Chemical’s acquisition of DuPont (the operations of these two companies were divided into three separate business segments following the merger). Furthermore, PPG’s acquisition of AkzoNobel serves as strong evidence that leading chemical companies use mergers and acquisitions to reshape the structure of their value chains and accelerate their transition toward a more specialized business model, Li Jian added. Key drivers and obstacles for M&A in the future: According to Dede, over 80% of chemical industry executives believe that acquiring advanced technologies or applying existing technologies is the main factor driving the continued strong momentum in international M&A. In contrast, 37% of executives believe that economic volatility is the biggest potential factor hindering further growth in M&A activities. “Political uncertainties such as Brexit and the U.S. elections have further increased market uncertainty, making it difficult for chemical companies to predict changes in the trade environment over the next one to two years. Despite these uncertainties, the underlying economic conditions will continue to support a strong momentum in M&A activities within the chemical industry over the coming year, leading to further integration of various elements within this industry chain, concluded Shi Derui, President of Korn Ferry for Greater China. M&A activities in 2016: According to statistics, in 2016 there were 17 transactions in the global chemical industry with a value of over 1 billion dollars each; most of these transactions took place in the petrochemical sector and the field of basic chemicals. Among the top 10 transactions, U.S. companies played a dominant role, with 5 acquirers and 6 target companies coming from the United States. Common ideas behind transactions include industry consolidation, product portfolio restructuring, and asset restructuring. Compared to 2015, the number of major deals made to expand the specialty chemicals business has decreased, but it remains the main driving force behind transactions.