09 April 2013 16:44 [Source: ICIS news]
HOUSTON (ICIS)--The global chemical industry is poised for modest growth in 2013, with merger and acquisition (M&A) activity likely to be a key factor in helping companies grow revenues – offsetting negative impacts from energy and feedstock volatility, ongoing eurozone worries and regulatory policies, the consultancy Deloitte Touche Tohmatsu said on Tuesday.
While overall organic growth for the industry will likely be modest, M&A should play a prominent role in driving growth in 2013, the consultants added.
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In a report – titled “2013 Global Chemical Industry Mergers and Acquisitions Outlook” – Deloitte identifies a number of factors driving growth of M&A activity around the world – particularly for North America, Europe and
Those factors include new markets, shale gas discoveries and the progression of the advanced materials systems industry, Deloitte said.
The recovery of the
The Deloitte report also predicted "continued stamina" for top-chemical commodity producers to consider new facility expansion and to restart suspended facilities in
"The North American chemical industry is showing dramatic change, attributable in part to favourable shale gas economics supporting the petrochemical sector," said Duane Dickson, Deloitte’s global chemicals sector leader.
"Companies that were looking to the Middle East and Asia for M&A investments just a few years ago are now turning their attention to growth opportunities in
Companies with liquidity were making acquisitions to transform their business and execute growth strategies, the report said.
Key drivers of this activity include strong balance sheets, companies eager to build market positions in core areas, continued portfolio realignment and an increased focus on international investments, especially in emerging markets.
A number of struggling companies, on the other hand, have been focused on improving operational processes to increase financial performance. In addition, some stressed companies are forced to consolidate, a move driven by the disposal of non-core assets to raise cash to reduce excess capacity and rationalise facilities, the report said.
"European chemical companies are cautiously optimistic as a result of the current economic climate," Dickson said.
"Many are effectively using strategic growth plans and focusing on better value-added products and less cyclical businesses,” Dickson added.
Structural imbalances evidenced by overcapacity in certain subsectors are factors likely to drive Chinese companies to identify and fill market gaps, as they strategically pursue M&A as a means to raise the future value of a company, the consultants added.
($1 = €0.77)
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