HOUSTON (ICIS)--The global chemical industry likely will experience an increase in merger and acquisition (M&A) activity this year due to downstream value-added opportunities, strength in specialty chemicals and portfolio realignments in North America, a global consultancy said on Thursday.
In its 2014 Global Chemical Industry Mergers and Acquisitions Outlook, Deloitte Touche Tohmatsu sees US chemical makers focusing their M&A efforts on investments that offer product differentiation in the global chemicals market. The consultancy also sees a continuation of large deals in the first half of 2014.
“This year, developing megatrends like [the] expanding global middle class, population growth and food security will influence global chemical M&A opportunities in end markets such as agrochemicals, as well as impact M&A activity in various regions,” said Dan Schweller, Deloitte’s global manufacturing M&A leader. “Also, North America M&A activity will likely increase as chemical companies continue to pursue large structural portfolio realignments.”
Deloitte said it sees M&A activity for European chems as tepid, with the region’s economy “stabilising, yet still fragile”. Competition from Asia and the US will impact growth prospects for many European chems this year, Deloitte said.
China will continue to drive Asia Pacific’s transaction activity, with M&A investments playing a key role, the consultancy said.
Latin America specialty chems will consolidate further in 2014, with companies having a greater focus on “capturing synergies, gaining operational efficiency and becoming more competitive”, Deloitte said.
The M&A outlook for the Middle East is mixed but with moderate overall growth, Deloitte said.