InterviewChem M&As shift away from US, Europe

19 August 2008 20:02  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS news)--The global chemical mergers and acquisitions market is shifting away from the US and Europe to Asia and the rest of the world, the president of investment bank Young & Partners said on Tuesday.

Through the first half of 2008, acquired companies in the Asia and the rest of the world category comprised 41% of the total number of deals, followed by Europe at 35% and the US at 24%, according to the New York City-based chemical and life science investment bank.

“There has been a huge shift in M&A to Asia and the rest of the world,” said bank president Peter Young. “For the first time, this category has taken the lead in number of deals.”

In 2007, 23% of the deals took place in Asia and the rest of the world, versus 47% in Europe and 30% in the US.

“Asia and the Middle East are the arenas of growth, and the chemical industries there have gone well past the initial start-up phase, opening the door for M&A as a strategic tool,” said Young.

“Increased M&A activity is coming in all different flavours - whether it is consolidation in local markets, or international companies making acquisitions there. This will likely continue,” he added.

Through the first half of 2008, the global chemical industry completed $36bn (€24bn) in deals versus $55bn for all of 2007, according to Young & Partners.

Dutch giant Akzo Nobel’s acquisition of UK-based ICI for $16.9bn accounted for a big chunk of the total.

However, a moderate slowdown was evident in the number of deals completed, which totalled 34 transactions over $25m in size in the first half - well off the pace of 81 for all of 2007.

“The debt crisis that started in July 2007 has had the biggest effect on the ability of financial buyers to complete deals. Otherwise, there was only a modest effect on deal activity,” Young said.

In the first half, financial buyers captured 18% of the number of deals versus 22% in 2007.

“However, private equity is not dead,” said Young. “Clearly they are maintaining some level of activity.”

($1 = €0.68)

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By: Joseph Chang
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