InterviewChemical M&A rebound to be sustained: banker

16 September 2013 21:51  [Source: ICIS news]

By Joseph Chang

NEW YORK (ICIS)--The recent partial recovery of the global chemical mergers and acquisitions (M&A) market is expected to be sustained through the rest of 2013 and into early 2014, one investment banker said on Monday.

“Chemical M&A market volume will rise from $22bn last year to a stronger level in the $35bn-$40bn range for this year,” said Peter Young, president of investment bank Young & Partners.

On an equity value basis, already $19bn (€14bn) of deals greater than $25m in size closed worldwide in the first half of 2013, according to Young & Partners.

In 2012, dollar volumes of $22bn plunged from a peak of $82bn in 2011.

“Although CEO concerns about the problems visible across the global economic and financial landscape are reduced, the uncertainties that remain are still very significant,” said Young.

“For that reason, the current annual pace in dollar terms is still far below the pace in 2011, although equal in terms of the number of deals completed,” he added.

In terms of numbers of transactions, 42 of these deals were completed in the first half of 2013 versus 35 deals in the year-ago period.

The banker also sees valuations continuing to improve modestly from the trough in 2012, with greater gains for weak-to-average chemical businesses, as high quality assets did not experience a major valuation drop in 2012.

Financial buyer activity in the first half has been comparable to conditions last year in terms of number of deals.

These buyers accounted for just 14% of the total number of deals completed but comprised 32% of the deals on a dollar volume basis, driven by DuPont’s sale of its coatings business for $4.9bn to The Carlyle Group, noted Young.

($1 = €0.75)

By: Joseph Chang
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