InterviewGlobal chemical M&A market to rebound in 2010 - banker

12 November 2009 18:11  [Source: ICIS news]

Chemical M&A activity likely to riseBy Joseph Chang

NEW YORK (ICIS news)-- Global chemical mergers and acquisitions (M&A) are poised to rebound in 2010, Peter Young, president of New York-based investment bank Young & Partners, said on Thursday.

"We expect the chemical M&A market to improve meaningfully in 2010 in terms of number of deals completed," Young said in an interview with ICIS. "World economies are stabilising, the financing market has improved, and buyers and sellers are starting to close the gap with regard to their price expectations.”

"Baring a substantial wild-card hit to the financial system from the commercial real estate or other loan market, these factors will drive a recovery," he added.

Through the first three quarters of 2009, there were $22.7bn (€15.2bn) in chemical sector closed deals valued over $25 million on an equity basis, compared with $40bn for all of 2008, according to Young & Partners.

However, three big deals announced in 2008 - Dow/Rohm and Haas, BASF/Ciba and Mitsubishi Rayon/Lucite International - accounted for about $20bn of those closed transactions through the third quarter, noted Young.

Even with an additional $7.5bn of announced but not closed deals as of 30 September, "we are unlikely to exceed $30bn for all of 2009", said the banker.

However, an improving chemical M&A market was evidenced by a pick-up in the number of deals over $25m in size, which totalled four in the first quarter, seven in the second quarter and eight in the third quarter, said Young.

"This is a small sign that market volume is improving, and we expect this trend to continue into the fourth quarter and 2010,” he said.

“The first quarter of 2009 was likely the volume trough of the global chemical M&A market," he added.

($1 = €0.67)

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