Specialty chem M&A multiples recover to pre-crisis levels - banker

23 February 2011 21:01  [Source: ICIS news]

NEW YORK (ICIS)--Global specialty chemical mergers and acquisitions (M&A) multiples have recovered to pre-crisis levels, an investment banker said on Wednesday.

The median enterprise value/earnings before interest, tax, depreciation and amortisation (EV/EBITDA) multiple for specialty chemical deals in 2010 was 9.5 times, up sharply from 7.3 times in 2009 and back near the level of 9.6 times in 2008, according to Allan Benton, vice chairman and head of the chemical practice at US-based investment bank Scott-Macon.

The median specialty chemical EBITDA multiple for 2004–2008 was 9.1 times, he added.

Strong valuations appear likely to continue into 2011, said the banker.

“It’s encouraging to see large strategic deals early in the year being announced at strong multiples,” said Benton.

Commodity chemical EBITDA multiples have remained relatively steady, at 6.1 times in 2010, 6.6 times in 2009 and 6.8 times in 2008, noted Benton.

On 16 February, Switzerland-based specialty chemicals firm Clariant announced the acquisition of Sud-Chemie – a German adsorbents, catalysts and biofuel technology firm – for €2.0bn ($2.7bn), or a multiple of 10.5 times 2010 EBITDA.

US-based chemical major DuPont has agreed to buy Danish food ingredients and enzymes company Danisco for an enterprise value of $6.3bn (including the assumption of $500m in debt), representing a multiple of 12.8 times EBITDA, according to a previous estimate by JP Morgan.

($1 = €0.73)

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By: Joseph Chang
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