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Mergers and Acquisitions Worldwide Deal Volume and Value Dipped in the Global Chemicals Industry

| Editor: Marion Henig

Large mergers and acquisitions (M&A) in the global chemicals industry helped drive the total value of deals to over 14 billion dollar in the second quarter of 2011, according to the second quarter edition of Chemical compounds, a quarterly analysis of M&A activity in the global chemicals industry by PwC US. BRICS markets continue to present strong opportunities.

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Strategic buyers dominates overall M&A activity. (Picture: Archive)
Strategic buyers dominates overall M&A activity. (Picture: Archive)

New York, USA – In the second quarter of 2011, there were 28 deals valued at 50 million dollar or more worth 14.3 billion dollar compared to 31 transactions totaling 16.3 billion dollar in the second quarter of 2010. Average deal value decreased slightly during the second quarter of this year to 512 million dollar from 526 million dollar in the same period in 2010, due to lower deal value for announced mega deals. Despite a year over year decline in deal value and volume in the second quarter of 2011, total value and volume for the first six months of 2011 is up by almost 39 percent and more than 11 percent, respectively, versus the first half of 2010.

The quarter recorded four mega deals, or deals worth 1 billion dollar or more, for a combined total value of 10.6 billion dollar – representing approximately 74 percent of total deal value for the quarter. “While deal volume and value dipped in the second quarter, we’re on track to equal or exceed 2010 M&A activity and value,” said Tracey Stover, global chemicals leader for PwC. “The deal environment remains solid and the opportunity for growth, combined with strong balance sheets and a positive debt environment, leads us to believe that activity should continue to grow through the balance of 2011. We expect that smaller deals, which have been gaining steam since the first quarter, will continue to gain momentum and may level set larger deals by the end of the year.”

No Mid-Sized Deals Announced

In contrast to the larger deals, there were 24 smaller transactions (deals valued at 50 million dollar or more but less than 500 million dollar) totaling 3.7 billion dollar in value, up slightly from 3.6 billion dollar in value in the second quarter of 2010. There were no mid-sized deals announced in the second quarter of 2011.

According to PwC, strategic buyers once again dominated overall M&A activity, accounting for 81 percent of volume and 85 percent of value in the second quarter of 2011. Of the four mega deals announced in the second quarter of 2011, three were strategic deals and involved targets and acquirers from North America, South America, and Europe. This compares to the three mega deals in the second quarter of 2010, which comprised of two strategics and one financial buyer.

“Strategic deals were the catalysts for deals of all sizes in this quarter, and we expect that trend to continue,” added PwC’s Stover. “Financial leverage remains flat, cash-on-hand has increased substantially and companies with heavy balance sheets are well-positioned to make acquisitions to bolster growth and improve market share.”

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