Chemical M&A activity shifts dramatically lower – banker

25 April 2012 17:10  [Source: ICIS news]

JERSEY CITY, New Jersey (ICIS)--The market for global chemical mergers and acquisitions (M&A) is dramatically shifting to a lower level of activity, an investment banker said on Wednesday.

“There has been a dramatic shift in M&A and the market is clearly slowing down,” said Peter Young, president of US-based investment bank Young & Partners, at the 2nd ICIS World Surfactants Conference in Jersey City, New Jersey.

“The number one concern in the chemical sector today is the debt crisis in Europe. That is causing uncertainty and loss of confidence in the overall economic outlook,” he added.

In the first quarter of 2012, only $6bn in chemical deals were completed globally, according to Young & Partners. This compares to a record $82bn for all of 2011.

The largest deal completed in the first quarter was the $1.5bn acquisition of Belgium-based amines firm Taminco by US private equity firm Apollo Management.

The pipeline of deals that have been announced but yet to close has fallen in every quarter since the second quarter of 2011, noted Young.

There were just 10 chemical deals in the M&A pipeline at the end of the first quarter of 2012 versus 20 at the end of the second quarter of 2011, he said.

The dollar value of the M&A pipeline has fallen off even more dramatically, with just $7.8bn of deals yet to close at the end of the first quarter of 2012 versus $34bn at the end of the second quarter of 2011.

“This is a clear indication of a slowing of the M&A market. We will have a much more moderate level of M&A activity in 2012,” said Young.

Along with growing concerns about the European debt crisis, high-yield debt availability is becoming mixed, said the banker.

“Many positive factors have to be in place to create a strong M&A market. Take only one or two out and the market can change dramatically,” said Young.

By: Joseph Chang
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