19 December 2012 10:44 [Source: ICIS news]
LONDON (ICIS)--The market for chemical company mergers and acquisitions (M&A) is likely to remain resilient over the next five to ten years, despite the current economic uncertainty, according to global M&A advisory firm Valence Group.
According to the firm the industry is undergoing a key structural shift, as a result of the increasing prominence of Asian and Middle Eastern companies as players in M&A deals.
That shift, coupled with reduced US gas costs – estimated at around a fifth of the prices paid in Europe, as a result of the shale gas boom – and strong company balance sheets means that chemical sector M&A activity is likely to remain strong for the next decade, Valence said
The company added: “Despite macroeconomic uncertainty, chemicals M&A ended 2012 strongly and this should continue in 2013. Fundamental structural change, due to increased activity by Asian and Middle Eastern companies, is impacting the industry.
“With additional factors, such as low US gas pricing and strong company balance sheets, chemicals M&A is forecast to remain resilient for the next 5-10 years, with volumes well above historical levels,” it added.
Although total deal value for 2012 stands below 2011, the number of transactions carried out during the year is comparable to that recorded in 2010, with market activity remaining robust into the fourth quarter of the year.
The last three years of M&A activity have exceeded the last ten-year average, even including the banner year of 2007, Valence said.
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