chemical industry outlook


2016 Global chemical industry mergers and acquisitions outlook

A quest for focus

Las fusiones y adquisiciones son la mejor estrategia para contrarrestar las difíciles condiciones comerciales que están atravesando segmentos químicos como los fertilizantes y productos químicos agrícolas, gases industriales, entre otros, y frente a la presión competitiva de crecer en estos segmentos, se cree que la actividad se impulsará aún más.

Por otro lado, existen tendencias para aumentar el portafolio a través de la liberación de impuestos mediante los spin-offs y la diversificación. El diseño digital en la manufactura avanzada abre nuevos caminos en materia de innovación, pero adicionalmente, amenaza los volúmenes históricos en algunos productos básicos.

Resumen elaborado por Jorge Enrique Múnera D.
Líder de Process & Industrial Products

A continuación el informe completo en inglés.

Executive Summary

Global chemical mergers and acquisitions (M&A) activity is expected to remain buoyant in 2016, building on the strong momentum experienced in 2015, with continued portfolio realignment and consolidation plays in various segments. Companies have an increased focus on developing their core strengths and are looking to acquisitions to deliver growth and greater shareholder value.

In 2016, key chemical segments of fertilizers and agriculture chemicals, diversified, and industrial gases are all likely to experience an uptick in M&A transactions. Higher deal volumes are likely as companies use M&A as a tactic to deliver growth to counter challenging business conditions, which are expected to continue in these segments. Moving into 2016, these segments may also see transformational moves, especially after current portfolio adjustments and spin-offs underway are completed. Additionally, competitive pressure to build scale within all segments may drive further activity.

Other trends driving the increasing portfolio change are tax-free spin-offs and divestitures, as companies position themselves for innovation and growth. “The spin-off momentum is likely to continue in 2016, given the often low tax basis in legacy businesses, resulting in tax-free spins delivering greater shareholder value than straight dispositions,” says Duane Dickson, Deloitte Global Leader, Chemicals & Specialty Materials Sector. “Digital design and Advanced Manufacturing open up new frontiers for materials innovation and potentially threaten historical volumes in some commodities.”

2016 Global chemical industry mergers and acquisitions outlook

Regional outlook

In the Americas region, the United States is expected to continue to be a prime M&A market in 2016. While there is cautious optimism of a recovering economy in Brazil, it is not likely there will be significant chemical M&A activity during 2016, although lower valuations could generate interest in Brazil from foreign investors with a long-term investment horizon.

Within the European, Middle East, and African region, M&A activity in 2016 will likely be centered in Western Europe as portfolio restructuring continues. In the UK, investor sentiment is expected to remain strong, driving both inbound and outbound M&A activity. In Africa, consolidation will likely continue, underscored by three megatrends including shortage of water, population growth, and an expanding middle class.

Agricultural chemicals, specialty chemicals, and fine chemicals will remain top segments to watch in the Asia Pacific region, especially in China. In Japan, deals that strengthen high margin businesses are expected including those in high performance chemicals, with particular focus on segments, such as life sciences chemicals. Meanwhile, the Indian chemical industry M&A outlook for 2016 will likely be driven by commodity chemicals and significant transaction volumes expected in the specialty and agricultural chemicals segments.

The relentless pursuit of increasing shareholder value, cost cutting, focusing on core competencies, and capturing additional value by venturing into the solutions space is expected to buttress M&A activity this year and possibly disrupt other industries as a result.

Executive summary

Global chemical mergers and acquisitions (M&A) activity is expected to increase further in 2015, building on a strong year of activity in 2014 that saw 635 M&A transactions with an aggregate value of US$77.8 billion. According to the Deloitte Touche Tohmatsu Limited (Deloitte Global) Manufacturing Industry group’s 2015 Global chemical industry mergers and acquisitions outlook, companies are continuing to realign portfolios and pursue profitable inorganic growth opportunities. In addition, M&A interest is likely to be fueled by stronger corporate balance sheets, liquid debt markets, and continued favorable interest rates.

During 2015, key chemical segments of commodities, intermediates and specialties, fertilizers and agriculture chemicals, and industrial gases are all likely to experience continued growth in M&A activity. Another trend driving M&A in the chemicals industry is the focus on biotechnology and renewables.

2015 Global chemical industry mergers and acquisitions outlook
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