InterviewOilfield chems, coatings to be hot US M&A sectors in 2013

06 November 2012 21:04  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS)--The oilfield chemicals and coatings sectors will be hotbeds of merger and acquisition (M&A) activity in 2013, an investment banker said on Tuesday.

“Clearly the US is in a fortunate position with growing shale gas production. Fracking and changes in the types of oilfield service required will drive interest in oilfield chemical assets,” said Allan Benton, vice chairman and head of the chemical industry practice at US investment bank Scott-Macon.

In October, US-based specialty chemicals and services company Ecolab agreed to buy US-based oilfield chemicals producer Champion Technologies for $2.2bn (€1.7bn), strengthening its position in the energy services market.

The deal, expected to close by the end of 2012, follows Ecolab’s $8.3bn (including the assumption of $2.7bn in debt) acquisition of US-based specialty chemicals firm Nalco in December 2011, which brought it a major energy services business.

On the coatings front, interest will be boosted by the recovery in the US housing market, noted the banker.

“New housing construction rose in August, boosted by the strongest pace in single-family home starts in two years. That’s going to be good for coatings and building materials markets,” said Benton.

“We see that recovery continuing into 2013. Sellers of coatings assets should get a good reception in the market,” he added.

Global specialty chemicals M&A activity has tailed off in 2012 versus record levels in 2011, noted Benton.

So far in 2012, through the end of October, there were 25 specialty chemical deals closed for a total value of $20.4bn versus 50 deals totalling $62.4bn in value in all of 2011, according to Scott-Macon. In 2010, there were 43 deals for a total of $21.0bn in the sector.

Private equity players have taken a greater share of the specialty chemicals M&A market in 2012, accounting for 29% of all deals on the buy side in the first half of 2012 – up from 16% for all of 2011, said Benton.

“In 2013 we expect to see a lot of interest from private equity firms, especially with low-cost financing available,” he said.

($1 = €0.78)

By: Joseph Chang
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