InterviewPace of chem M&A to slow down in 2008

11 June 2008 19:30  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--The pace of global chemical industry mergers and acquisitions (M&A) will likely slow in 2008, but dollar volume could still be robust, a banker said on Wednesday.

“Since it is likely that we will face a prolonged debt crisis and possibly a US recession, we believe that there will be a slowdown in the chemical M&A market in 2008 in terms of the number of deals completed, in spite of the continued presence of the underlying factors that are driving M&A activity,” said Peter Young, president of Young & Partners, in an interview with ICIS.

“This also means that financial buyers will have a subdued presence,” he said.

In the first quarter of 2008, the global chemical industry completed 17 deals over $25m (€16m) in size - off the pace of 81 deals for all of 2007, Young said.

However, the deal value of completed transactions was $25bn in the first quarter of 2008, boding well for the year, he said. In 2007, the chemical industry completed a record $55bn in deals.

Dutch giant AkzoNobel’s $16.9bn acquisition of the UK’s ICI accounted for a large chunk of the total value, but there were also four other deals over $1bn in size, Young said, including India-based Tata Chemical’s buyout of US-based General Chemical Industrial Products in March.

“Companies are still trying to get their strategic portfolios correct,” Young said. “We’re seeing a slowdown, but it is still a relatively strong M&A market.”

Private equity buyers in the first quarter accounted for two deals, representing 12% of the total transactions, down from 22% of all deals in 2007 but close to the 15% for 2006.

“Private equity is not dead,” said Young. “There is no doubt that their presence is diminished but to count them out entirely would be wrong.”

($1 = €0.65)

Look for Peter Young’s bylined article on financial myths and realities in the 23 June issue of ICIS Chemical Business
Paul Hodges looks behind today's headlines and studies key influencers shaping the chemical industry in Chemicals and the Economy
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By: Joseph Chang
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