InterviewJapan chemical firms may boost M&A activity

23 September 2011 00:00  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS)--Japanese chemical companies are increasingly evaluating mergers and acquisitions (M&A) opportunities in the West amid the economic turmoil and declining public valuations, bankers from The Valence Group said on Thursday.

“We are seeing a heightened level of interest among Japanese chemical companies seeking acquisitions in the Western world, although that has not translated yet to more deals,” said Telly Zachariades, partner at global investment bank The Valence Group.

“Japan’s chemical companies have strong balance sheets, so this short-term volatility in asset prices gives them a good opportunity to acquire businesses in the West,” added Peter Hall, partner at The Valence Group.

The strength of the Japanese yen versus the US dollar and euro provides additional motivation to buy Western assets, he added.

The last major chemical deal involving a Japanese buyer and Western seller was Mitsubishi Rayon’s acquisition of UK-based methyl methacrylate (MMA) producer Lucite International for around $1.6bn (€1.2bn) in May 2009.

However, within Japan, it is less likely that major M&A activity will take place, noted the bankers.

“Even today, culturally within Japan, people are willing to be acquirers. But the idea of being a seller is a psychologically difficult concept,” said Hall.

“One board member of a Japanese chemical company said it has spent lots of time looking for targets within Japan, but has not been able to find willing sellers. “Everyone realises there are benefits to M&A, but the concept of selling is still a barrier,” he said.

($1 = €0.73)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joseph Chang
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