13 June 2011 08:52 [Source: ICIS news]
SINGAPORE (ICIS)--Emerging markets will increasingly dominate merger and acquisition (M&A) activity in the chemical industry in the years ahead, supported by the growth of end markets, government policies and access to funding, business advisers KPMG said on Monday.
“Already, M&A in BICME countries (Brazil, India, China, Middle East) have increased from 5% of deal value and 17% of deal volume in 2007 to 30% of deal value and 28% of deal volume in 2010,” the firm said in a report on its website.
Several key chemical end markets in the west are continuing a shift to the east, the report said.
“The textile industry has been firmly based in the east for many years, and now suppliers from the west are being acquired,” it said, citing the acquisition of German firm Dystar – one of the world's largest producers of dyes – by ?xml:namespace>
The automotive industry appears to be rapidly following suit, with
Automotive sales growth in
“This is affecting chemical producers through the eastward relocation of some of the established OEMs [original equipment manufacturers], such as Ford's new assembly plant in
“Another factor is the rise of new, emerging market manufacturers, with the recent acquisition of Volvo by Geely of China being a notable example,” the report added.
The construction industry in emerging markets also shows tremendous growth potential, the firm said.
Construction spending in
“The Chinese urban population is likely to reach 600m by 2025. In
Emerging market growth for pharmaceuticals, agrochemicals and consumer products is also on the rise, driven mainly by a rapidly expanding middle class, particularly in
BICME chemical companies are increasingly looking to acquire new technology, to fully capitalise on the growing demand in downstream industrial markets, particularly at the specialty end of the chemical value chain. “As a result of this technology drive, we expect M&A activity to accelerate in BICME countries over the coming years,” KPMG added.
“By 2020, if we continue to see the rapid growth of companies such as SABIC, Sinopec, Sinochem, Reliance, Saudi Aramco, Braskem and others, up to seven of the ten largest chemical companies could be based in BICME countries as the current largest players pursue profitability over scale,” the report said.
“Recognising this trend will be imperative for chemical companies developing long-term M&A strategies now and in the years ahead,” KPMG added.
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