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M&A–Boom in Chemicals

Takeover Trends: Why 2016 is the Year of M&A for the Chemical Industry

| Editor: Dominik Stephan

(Picture: gerd Altmann (CC0))

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The M&A-boom in the chemical industry won't come to an end: After reaching record levels in 2015, the next wave of mergers and transactions might be even bigger. But not all takeovers are created equal: Certain factors distinguish successful corporate takeovers and mergers.

The chemicals segment Mergers & Acquisitions reported a record high for 2015 - a trend that will carry its momentum well into 2016, analysts agree. The great trends and success factors for sustainably effective corporate acquisitions are Specialisation, “Buy and Build”, “The Best of Both Worlds” as well as “Think Customer”.

The emerging billion dollar deal between Dupont and Dow Chemicals marks the culmination of a chemicals year with corporate takeovers and mergers at record levels. The next billion dollar corporate takeover followed shortly before Christmas with the Chinese chemical corporation Chemchina’s offer for Syngenta.

Chemicals: Strong M&A Activities Expected for 2016

Analysts assume that the strong M&A activity in the chemicals segment will also continue in 2016. Dr. Sven Mandewirth, Partner and Industry Lead Chemicals at Camelot Management Consultants, summarises the challenges for the affected companies as follows: “With the increasing volume of Mergers & Acquisitions, a growing number of companies are faced with the question of how the merger or acquisition could unfold the desired effect, especially in light of increasing market volatility.”

The consultants at Camelot have identified four central trends and success factors in Mergers & Acquisitions within the scope of a current market and customer survey in the chemicals segment that become decisive for deals in the chemical industry:

Trend No. 1: Specialisation and Market Leadership

In the case of the marriage between Dupont and Dow, this only supposedly pertains to market power through size, because the break-down into specialised segments after the merger has already been planned. Successful M&As of the future no longer peruse the principle of size but rather a specialisation strategy with regard to products and markets with the objective of becoming global market leaders in these segments. This assumes a clear definition of the future business model, as well as the intended market segments.

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