US credit crunch not a block to smaller M&A – RPM

09 October 2008 16:31  [Source: ICIS news]

HOUSTON (ICIS news)--The credit crisis would likely not halt small-to-medium sized merger and acquisition (M&A) activity, and could even help by lowering valuations, US specialty chemicals maker RPM International said on Thursday.

The small-to-medium targets would include businesses in the $100m-150m (€73m-110m) range, RPM officials told analysts on a conference call.

"The small-to-medium sized acquisitions that have long been the bread and butter of RPM are still active," one official said. "There is still good activity there."  

However, bigger M&A deals would be blocked by the credit crisis, even though many attractive assets would likely be put on the block in the months ahead, the officials said.

"The market for larger deals is real poor right now," an official said.

"It's unlikely that we would pursue or do a major acquisition in the next nine months" up until the end of the company's current fiscal year, he said.

Because many chemical assets have been taken over by private-equity funds that are highly leveraged, there would likely be some unravelling of that trend as the credit crunch bites, the officials said.

Beyond the company's current fiscal year, RPM would start taking a hard look at a larger acquisition, they said.

Earlier on Thursday, RPM reported a 1.8% gain in net income in its fiscal first quarter ended 31 August to $69.5m, but warned of difficult business conditions ahead.

($1 = €0.73)

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By: Stephen Burns
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