Global chemicals M&A deal value grew by 13% in 2014 and is expected to experience an increase in 2015, according to the fourth edition of the Chemicals Executive M&A Report by A. T. Kearney, a global management consulting firm. The global survey of chemical executives and members of the M&A community shows that 60% of these chemicals executives see increased mergers and acquisitions in 2015, driven by portfolio restructuring and an overall focus on companies’ core businesses.
Looking at North America chemical deals in 2014, deal value grew by 16% and transactions grew by 24% with seven of the top 10 transactions involving buyers or sellers focused on improving their core businesses. Notable divestitures include Ashland’s sale of its water technology business, Phillips 66’s divestment of its flow improver business and CF Industries’ divestment of its phosphate business.
Guttorm Aase, A.T. Kearney principal and co-author of the Chemicals M&A Executive Report notes, “North America is projected to maintain a dominant share of chemicals mergers and acquisitions in 2015. However, China will be the strongest growth region for chemicals M&A activity in 2015, driven by further consolidation of the local market as well as an increase in geographic expansion and inbound international investments in the China market.”
Financial investors were involved in some of the major deals in 2014, including Koch Industries and Goldman Sachs Capital’s $3 billion acquisition of Flint Group from CVC Capital Partners and Apollo Global Management’s sale of its majority share in Taminco to Eastman, valued at $2.7 billion. Financial investors’ focus shifted significantly toward specialty chemicals in 2014. While only one-third of companies acquired by financial investors in 2012 were active in specialty chemicals, the share in 2014 was 50%, according to the report.
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