Global chemical M&A activity jumps more than 11% in 2010 - PwC

10 February 2011 13:00  [Source: ICIS news]

HOUSTON (ICIS)--Mergers and acquisitions (M&A) activity in the global chemicals industry rose by more than 11% in 2010 from the previous year as the economy improved, consultancy PwC said on Thursday.

The number of announced deals (successful or not or yet to be determined) totalled 1,140 in 2010, compared with 1,024 deals in 2009, according to PwC.

Deal activity with a disclosed value more than $50m (€37m) was up 25% in 2010, said PwC in the report, “Chemical compounds: Fourth-quarter 2010 global chemicals industry M&A analysis”.

The deal values cited in the report include announced deals that were not necessarily completed during the year and M&A activity that was not necessarily successful.

For example, the report includes M&A activity such as BHP Billiton’s $39.8bn (€29bn) unsuccessful bid for PotashCorp, which gave the overall M&A value a “significant boost”, according to the report.

“We also continue to see a trend toward larger deals,” PwC continued.

Even excluding BHP’s failed acquisition of PotashCorp, “the average deal value for all deals with disclosed values greater than $50m was up from $378m in 2009 to $635m in 2010,” PwC said. “Based on what we see in the pipeline of deal activity for deals that have not been announced, we expect to see this trend continue.”

PwC said it expected to see stronger financial investor deal activity in 2011, “assuming that lending conditions continue to improve”.

It added, “As the economy continues to improve, we expect to see more financial investor activity on the sell side as some financial investors look to divest investments they were forced to hold during the economic downturn.”

The report also examines recent expansion by chemicals producers into the countries of Vietnam, Indonesia, South Africa, Turkey, and Argentina (VISTA) and the tax advantages they offer.

“While by comparison, China and Russia give the advantage to local businesses over outsiders, VISTA country governments view foreign investment as an important source of capital for their economies,” PwC said.

($1 = €0.73)

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By: Brian Ford
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