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Chemicals

The experts within our Chemicals Industry Group maintain ongoing contact with a wide range of knowledgeable sources to stay abreast of the issues and trends that could impact the industry’s M&A climate or otherwise influence our clients’ businesses.  Following are a few of the topics addressed in our most recent Chemicals Industry Review, which is published quarterly.

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CHEMICALS REVIEW (2009: Q4) (View complete report)

Thoughts from the Group

In 2009, the chemical industry M&A market suffered along with the rest of the economy.  However, private equity firms refocusing on chemical investments coupled with private companies seeking a sale before capital gains tax increases, we expect a rebound of chemical M&A activity in 2010.

2009 M&A Year in Review

2009 proved to be a much more painful year than we expected in terms of deal volume for the chemical industry.  Although year-end results have not yet been finalized, we expect the year to ring in at below $40 billion in total M&A dollar volume.  A significant portion of the industry’s M&A volume came from Dow Chemical’s acquisition of Rohm & Haas ($19 billion) and subsequent divestitures (OPTIMAL, Morton, etc.).  The next large contribution came from BASF’s acquisition of Ciba, which closed at ~$5 billion in enterprise value.  The reasons for such significant decline in M&A activity are similar to those that are plaguing other industry sectors:

  • General lack of available financing at high leverage multiples
  • Underperformance due to economic downturn
  • Valuation gap between sellers and buyers caused by difference in future outlook
  • “Wait and see” attitude with respect to proving out projections and management expectations

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Chemicals Industry Group

Chemical Contact

Bradley S. Schreiber
Managing Director
714.327.8634

Biography



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