21 August 2008 20:52 [Source: ICIS news]
By Joseph Chang
“The Dow/Rohm and Haas transaction will likely be a catalyst to fortify the resolve of other major chemical companies to continue their transformation via large acquisitions,” said Tim Wilding, Oppenheimer’s managing director and head of chemicals.
“This raises the stakes," he said.
Aside from the mega deals, which include Ashland’s planned $3.3bn acquisition of specialty chemical firm Hercules, strategic buyers are “super active, analysing smaller, highly synergistic add-on acquisitions that enhance a market position or product offering,” Wilding said.
European and Japanese buyers have been looking for specialty chemical assets in the US, he noted.
“The weakness of the US dollar is an added incentive for non-US buyers,” Wilding said.
The banker sees a solid chemical merger and acquisition (M&A) market through 2009, barring another major leg down for the global economy.
“Strategic buyers generally have strong balance sheets and a high capacity and appetite to continue pursuing M&A as a source of growth,” Wilding said. “But if the economy does take another leg down, then all bets are off.”
Strategic buyers continue to be very selective and discriminating, Wilding said.
“This sometimes makes financial buyers or the IPO [initial public offering] market the only real exit for many businesses,” he said.
While billion-dollar leveraged buyouts are “dead for the time being”, Wilding pointed out that smaller deals involving financial buyers are getting done.
For example, on 12 August, New York-based private equity firm Snow Phipps Group (SPG) acquired ArrMaz Custom Chemicals, a producer of chemicals for the fertilizer, asphalt and mineral-mining industries, from GSO Capital Partners, he said.
($1 = €0.68)
For more analysis and insight on chemical industry M&A, look for the 15 September issue of ICIS Chemical Business
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