Credit crunch to brake chemical M&A surge - PWC

07 February 2008 21:50  [Source: ICIS news]

HOUSTON (ICIS news)--The surge in the value of chemical merger and acquisition (M&A) activity in 2007 will be slowed by the global credit crunch and the weakness of the US dollar, accounting firm PriceWaterhouseCoopers said on Thursday.

The value of M&A activity in the global chemicals industry more than doubled to $109bn (€74bn) in 2007 from $53bn in 2006, the firm said.

"Despite volatility in the lending and credit markets and the declining value of the US dollar, current M&A activity remains robust, but these factors will likely have an impact on deals in the future," PricewaterhouseCoopers said in a statement.

The surge in 2007 was driven by both an increase in deals worth more than $1bn to 19, from nine in 2006, and a rise in the overall number of transactions to 819. A spokeswoman was not immediately available to give a comparative figure for 2006.

The size of the larger deals also grew, with three deals above $10bn and three in the $5bn-10bn range. That compares with a single deal above $10bn in 2006.

Around 78% of the transactions in 2007 were completed by strategic investors, up slightly from 70% in 2006. Financial investors accounted 24% of deals in the first half of the year and 21% in the second.

Buyers from the Middle East began playing a more active role in 2007, bidding more aggressively in transactions and representing 5 of the 19 transactions above $1bn, PricewaterhouseCoopers said. 

"We expect that these emerging market players will continue to lay claim on larger pieces of the chemical business and, particularly, US assets," the company said.

($1.00 = €0.68)

By: Stephen Burns
+1 713 525 2653

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