Global chemical M&A transaction volume hit a historical record in 2011, but as global economic uncertainty increases, financing transactions face more constraints. At present, although the potential buying interest is high, effective asset sales are limited, which all make the slowdown of M&A transactions in 2012 a foregone conclusion.
Peter Yang, chairman and general manager of Young & Partners, the US investment bank, said that in view of the current situation, the chemical M&A market has apparently sent off the peak of transactions regardless of the analysis of the volume or turnover. Young & Partners report shows that although the first three quarters of 2011, chemical mergers and acquisitions breakthrough reached 64 billion US dollars, far exceeding the 2010 annual total of 39 billion US dollars; but the total turnover of more than 25 million US dollars in 2010, a total of transactions In 65 cases, there were only 61 cases in the first three quarters of 2011. Peter Yang said that although the momentum of M&A transactions in the first three quarters of 2011 was relatively strong, due to the European debt crisis and worries about the economic recession again, trading activities have been slowing down significantly. In fact, the number of completed M&A transactions has seen a quarter-to-quarter decline. In the first three quarters of 2011, the share of private equity companies in the chemical M&A market dropped from 21% in 2010 to 5%.
“The M&A market is like a big stomach. If you want to eat but you don’t have food, chances are too few. In some cases, due to the imbalance between supply and demand, the valuation of M&A is artificially raised, leading to a vicious cycle.†Global Investment The head of Nomura Middle East and Africa, Carlisle, said: "Although there may be more large-scale transactions in 2012, we will not see any real recovery until the global economic outlook is more stable."
Despite many difficulties, PricewaterhouseCoopers anticipates that this year's chemical mergers and acquisitions will improve. “Although the slowdown in M&A still exists, the attention of strategic investors and the mentality of trying to use M&A opportunities will make the trend better.†Peter Young also stated that many chemical companies are now ready to withstand financial risks. The damage that the crisis may bring.
For this year's chemical M&A market, Chris, the head of investment bank Hualien, said that despite the overall slowdown in M&A, the desire to sell chemical assets remains strong, mainly because sellers lack capital and have a strong incentive to trade. Rally Harris, head of the U.S. investment bank PrinceRidge, is cautiously optimistic. “We expect that the M&A market in 2012 will continue to be on a healthy growth path. Private equity companies may become more aggressive sellers to maximize asset expansion.†Willning, Oppenheimer’s head, expects: “Some private equity chemicals companies are seeking On the market, if they believe that mergers and acquisitions can bring great benefits, then these companies are more willing to walk into the M & A market." John, a partner of Arsenal Capital Partners, predicts that the accurate M & A valuation will cause M & A sellers to come out of the shadow in 2012. Strong funds and strong asset support have made many strategic buyers and private equity investment companies wait for opportunities to sell their businesses. This will eventually push M&A parties into the market and create M&A opportunities. According to the head of the Veyron Group, mergers and acquisitions are still a high priority for CEOs in formulating corporate strategies for large cash-rich companies and private equity investment companies.
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