Chemical M&A rises 15% in first quarter - PwC

05 May 2010 15:45  [Source: ICIS news]

TORONTO (ICIS news)--Merger and acquisition (M&A) activity in the chemical industry was much stronger in the first quarter, driven by five large deals worth $17.9bn (€13.8bn) in total, compared with the 2009 first quarter, PricewaterhouseCoopers (PwC) said on Wednesday.

Overall, there were 33 more deals in the 2010 first quarter, reflecting a 15% increase from the year-earlier period, PwC said.

“Large-deal activity is off to a strong start in first quarter of  2010, as five deals with a value greater than $1bn were announced, substantially driving total deal value,” the US accounting and advisory firm said in a statement.

These five deals accounted for $17.9bn in deal value, representing 80% of total activity in the first quarter of 2010, and already surpassed total large-deal activity for all of 2009.

When looking at deals with a disclosed value greater than or equal to $50m, first-quarter activity was up by 11 deals or 110% over the same period last year.

With financial markets and the global economy beginning to recover, the increase in chemical industry M&A was consistent with expectations, PwC said.

"Based on our current view of the market and the transactions in progress, we are optimistic that the level of M&A activity will remain strong in 2010," said Saverio Fato, global chemicals leader for PricewaterhouseCoopers.

"Proactive companies in the chemicals sector that are willing to invest up-front time preparing for deals so that they can move quickly as opportunities become available will be able to effectively utilise M&A as a growth tool to reposition themselves,” he added.

Meanwhile, financial investors were less active, PwC said. Only 11% of the quarter’s deals included a financial investor.

However, as the economy and debt markets continued to recover, financial investor deal activity in the chemical sector could rise again, PwC said.

PwC added it had already noted some financial investors coming off of the sidelines and actively participating in the bidding process for several of the recent deals.

($1 = €0.77)

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