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December 2, 2008 |
Large deal announcements and aggressive deal activity during the third quarter of 2008 propelled the global chemicals industry to new M&A levels, according to the PricewaterhouseCoopers (PwC) report, Chemical Compounds: Global Chemicals Mergers & Acquisitions Analysis – Third Quarter 2008. A total of 27 deals (with a disclosed value of at least $50 million) were announced during the third quarter, bringing the total amount of chemical deals to 71 through the first three quarters of 2008. In addition, six large deal announcements (worth more than $1 billion) in the third quarter (valued at $28 billion) helped deal value climb to $48 billion through the third quarter, a jump from the $16 billion reported in the first half of the year. Given the current state of the economy, these high-profile, transformational deals illustrate that many chemical companies are still preparing for future growth. However, deal value is significantly shy of last year's $119 billion and is still short of 2006's level of $55 billion, according to the report.
"After a complete absence of large deals in the second quarter, the global chemicals industry rebounded with six large, significant deals this quarter, signalling a robust M&A market in this sector," said Michael Clifford, Canadian chemicals leader of PricewaterhouseCoopers.
In total, there were 622 announced deals so far in 2008, which include deals with no disclosed value, amounting to 829 deals on an annualized basis. This level is on pace to exceed the total number of deals announced in 2006 (759) and approach the levels reached in 2007 (849).
As reported in previous quarters, PwC's Chemical Compounds report found that strategic investors acted as the majority financers of deal activity in the chemicals sector – accounting for over 80% of deal value accumulated during the first three quarters of 2008. Such a trend persists due to a continued strain on the credit markets and restricted access to financing.
"North American entities are on the forefront of M&A activity this year as they continue to claim the main role in further consolidating the chemicals industry," added Clifford. "While the rising price of the US dollar may be preventing cross-border deals, large transformational deals that drive long-term strategic growth objectives are still being aggressively pursued by American companies."
www.pwc.com/chemicals
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