Europe’s activist investors to push for firms break up – consultancy

LONDON (ICIS)–Following the steps of their North American peers, European activist investors are to push in 2015 for break ups at chemical majors in the region urging companies to streamline their at times over-diversified portfolios, Chicago-based consulting firm AT Kearney said on Monday.

According to Joachim von Hoyningen-Huene, co-author of the report Chemicals Executive M&A [Mergers and Acquisitions] Review by consultants at AT Kearney, the movement observed in the US, where activist investors forced portfolio restructurings at majors like Dow Chemical and DuPont, will arrive in Europe in 2015 as well as Asia.

He added that the sharp fall of crude prices will also impact the way oil majors in Europe see their petrochemical assets, which are likely to be sold, creating M&A opportunities for chemical companies in the region.

“With the current low oil price we expect oil companies to put chemical assets on the market to generate cash. This will create opportunities for chemicals companies interested in the oil industry to buy suitable assets for more reasonable multiples,” said Von Hoyningen-Huene.

Globally, however, M&A activity in Europe will have little weight on the overall account of transactions, on the back of its domestic problems like a stagnant economy and tensions with Russia.

China and North America in 2015 will once again drive M&A activity in the chemical sector, which overall will grow year on year compared to 2014.

According to AT Kearney, since 2013 the average deal value of chemicals M&A has increased by 13%. Among chemical executives interviewed by the consultancy, 60% of them saw 2015 as the year in which global chemical M&A activity will grow significantly although in Europe it will continue to be subdued on the back of the poor economic performance and tensions with Russia.

The M&A activity in 2015 has already had a boost with the mega $6.2bn deal between US specialty chemicals majors Albemarle and Rockwood Holdings, which is expected to close during the first quarter.

North America will see most of the chemical M&A deals in 2015, although the activity in China will grow at a fastest pace, said the report.

“China will be the strongest growing region for chemicals M&A activity in 2015 with expected further consolidation of the local market as well as an increase in geographic expansion and inbound international investments in the critical Chinese market,” said Thomas Rings, co-author of the report.