InterviewUS bailout positive for chems, M&A

19 September 2008 20:29  [Source: ICIS news]

Bailout plan benefits chemsBy Joseph Chang

NEW YORK (ICIS news)--The US government’s expected bailout of the banking sector will provide stability for the chemical industry and liquidity for mergers and acquisitions (M&A), an investment banker said on Friday.

“Uncertainty detracts from market value, and we seem to be getting some good movement from the government toward reducing that uncertainty,” said Allan Benton, vice chairman and group head of the chemical industry practice at New York-based investment bank Scott-Macon.

The Dow Jones Industrial Average (DJIA) shot up by over 400 points on Friday morning and was still up by 333 points, to 11,353, in early afternoon trading.

The bailout and resulting stability in the financial markets could also benefit chemical M&A, he said.

“More stability in the debt markets should favourably impact M&A,” Benton said. “While the chemical industry has not been directly impacted by the subprime mortgage crisis, the crisis has hampered liquidity.”

However, Benton said that for solid chemical transactions, financing has been available.

For example, on 29 August, UK-based private equity firm Close Brothers bought out UK-based specialty chemical firm Warwick International for £129m ($235m) from US-based industrial conglomerate Sequa, with £85m in financing from Royal Bank of Scotland, Barclays, Lloyds TSB and HSBC.

Scott-Macon advised Sequa on the deal, Benton said.

“However, a resolution of the crisis would only help,” he said.

($1= £0.55)

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By: Joseph Chang
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