No specialties buying spree in Europe - bank

14 July 2008 13:04  [Source: ICIS news]

LONDON (ICIS news)--Specialty chemical deal making in the US should not mean a European spree, Credit Suisse said on Monday.

Two high-profile US specialty chemical deals - Dow’s $18.8bn bid for Rohm and Haas and Ashland’s $2.6bn offer for Hercules - highlighted the sector last week.

But the bank believed that deal making was region specific given currency movements and the focus in Europe on share buy-backs by important players such as Akzo Nobel and DSM.

Very few large buyers remained, the bank's analysts said.

BASF was struggling to sell its commodity styrenics business and had €9bn ($14bn) of debt, Credit Suisse said, adding its gearing in 2007 was 47%.

“We do not see a significant move into European specialty players any time soon,” it added.

The Dow offer was made at 11.1 times enterprise value (EV) to estimated 2008 earnings before interest, tax, depreciation and amortisation (EBITDA), Credit Suisse said and the Ashland offer was made at 8.4 times, according to consensus figures.

“Although European valuations are attractive we do not see sizeable buyers any more and believe action in Europe will be limited," it said.

($1 = €0.63)

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By: Nigel Davis
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