Global chemical M&A hits $8bn in Q1 - banker

23 May 2007 19:50  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--The global chemical industry completed $8bn (€5.9bn) in mergers and acquisitions in the first quarter, said a leading investment banker on Wednesday.

That compares with $2bn for the first quarter of 2006, which turned into a record $42bn for the full year, according to New York-based investment bank Young & Partners. Pending is SABIC’s recently announced $11.6bn buyout of GE Plastics.

The pace of activity continues at a rapid clip, with 20 deals over $25m in size completed in the first quarter, versus 17 in the year-ago period and 78 in 2006.

“M&A activity is close to a record pace in today’s liquid market,” said Peter Young, president of Young & Partners. “Activity will remain healthy as the main drivers of M&A - ongoing industrial restructuring, business portfolio rearrangement, consolidation activity and active financial buyers - continue.”

The action moved abroad, with 50% of the deals taking place in Europe and 30% in the rest-of-the-world category in the first quarter, he said. Targets in the US comprised only 20%.

“US buyers have backed off from buying US businesses,” said Young.

“Because of a shift in the low-cost structure to the Middle East and higher growth prospects to Asia, there is more of a desire to have assets there. In addition, more petrochemical capacity is coming on in low-cost regions, making it less attractive to buy commodity assets in the US,” he said.

Private equity took an impressive five out of the top 10 deals, he noted.

These included Advent and Carlyle/H.C. Starck ($912m), Advent/Celanese’s oxo products and derivatives unit ($635m), Gilde Buyout, Banexi Capital and BNP Paribas/Groupe Novasep ($552m), Rhone Capital/Arizona Chemical ($485m) and Pamplona Capital Partners/Johnson Matthey Ceramics ($301m).

($1.00 = €0.74)

Look for the full story on chemical industry M&A in the 4 June issue of ICIS Chemical Business Americas.

By: Joseph Chang
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