The value of global chemical industry mergers, acquisitions fell 64% in Q3 from previous quarter to US$6.46B as average transaction value fell 59%; analyst says CEOs still actively pursuing deals, but looking for good value
October 11, 2011
– The value of mergers and acquisitions in the global chemical industry during the third quarter plunged 64% to US$6.46 billion from the previous quarter while the average value per transaction plummeted 59% to $89 million, Bloomberg reported Oct. 9.
This year, at the outset, looked to be a record year as H1 saw a flurry of activity that was on par with 2007 when deals totaled $131 billion.
Bloomberg reported that the debt crisis in Europe has put the brakes on multi-billion dollar deals. Majors like Germany-based BASF SE are focusing on debt reduction instead.
Companies with healthier balance sheets, particularly Asia-based companies, are still looking for deals, Ariel Levin, a partner at Valence Group, told Bloomberg. Lanxess AG is actively searching for worthwhile assets, but is following strict guidelines so that the company doesn’t overpay for assets, Bloomberg reported the CEO Axel Heitmann saying Aug. 11.
Bloomberg reported that initial public offerings in the industry have also slowed this year due to the European debt crisis and the declining value of equity markets.
Bloomberg noted that the slowdown in IPOs and M&As is reflected in how much cash some companies in Europe are sitting on. At the end of the second quarter, European chemical companies reported about €29 billion ($39.6 billion) in cash, an increase from €16.5 billion two years ago.
The primary source of this article is Bloomberg, New York, New York, on Oct. 9, 2011.