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Global chemical M & A will continue to be hot in 2015

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global chemical mergers acquisitions (M & A) in 2015 is expected to continue to be hot or further warming up, strategic private equity buyers will look for opportunities. The financial performance of the enterprise is bright, the financing interest rate is attractive, which supports the high transaction valuation. Peter / > Peter young, President of young & partners, an investment bank of

, pointed out: "the strong M & a momentum in the second half of 2014 will continue to 2015. For strategic buyers, pent up dem for growth an increase in cash have been will continue to be the driving force for transactions. For financial buyers, low-cost debt financing idle capital will continue to drive deals

young pointed out that the total number of M & A transactions completed worldwide in 2014 was US $40 billion or more, of which nearly 90 transactions accounted for more than US $25 million. In terms of equity value, in the first three quarters of 2014, there were a number of M & A transactions in the world exceeding US $25 million, with a total amount of US $30.9 billion, which was basically equivalent to the total transaction volume of 2013. According to the data of


young & partners, in terms of the number of transactions, there were 64 transactions in the first three quarters of 2014, an increase of 8% compared with 59 transactions in the same period of last year, which further confirms that M & A activity is accelerating. Telly zachariades, a shareholder of wellen group, an investment bank of

, said: "the extremely active M & a market is generated by a combination of various factors. Based on the channels of asset transfer the transmission to be carried out in the market, it is expected that the momentum in the first half of 2015 will be quite active. " Mario Toukan, managing director of


keybanc capital markets head of chemical investment banking, said "new deals will explode" in the first quarter of 2015. "Although there are ups downs in asset valuation financing market, they are relatively good," said

Toukan. Potential sellers worry that the financing market will start to show signs of weakness. Sellers who want to close a deal are quickly starting the sales process. There are more more sellers in the market. " Bernd Schneider, managing director head of chemical division of N 1 Investment Bank of

, said: "we expect the factors favorable for chemical M & A will continue to exist in 2015. In terms of the overall environment, liquidity available financing are high, strategic financial investors will remain interested in inorganic growth. "

radical investors are pushing for restructuring of

. Bankers believe that more active participation of radical investors in the chemical industry will also lead to more transactions, especially in the United States. "Many companies continue to actively adjust their portfolios, sometimes voluntarily sometimes under pressure from aggressive investors," said zachariades of wellen group. Radical investors often act as catalysts to accelerate or facilitate restructuring, which often leads to mergers acquisitions. "

radical investors have always been a major force in promoting asset sales divestment, especially in the US chemical industry. The target companies include Dow Chemical, DuPont, Ashl, ferro, American Pacific, air chemicals, Calgon carbon, Mead Westvaco, innophos omniva solutions. Toukan of

keybanc points out: "in the past 18 months, radical investors have been more active in the chemical industry than in the past decade."


Dow Chemical is preparing to sell chlor alkali derivatives businesses, plans to increase the assets to be sold to $7-8.5 billion from $4.5-6 billion at the end of 2015 by the middle of 2016. In December 2014, the company agreed to sell Angus chemicals, a manufacturer of additives intermediates, to private equity firm Golden Gate capital for $1.2 billion, its sodium borohydride business to vertellus specialty materials for a total of $225 million, its polyolefin film plant in Ohio to valgrou ppackaging solutions.

DuPont plans to spin off its functional chemicals division, including the world's largest titanium dioxide (TiO2) business, by mid-2015.

in December 2014, Ashl group sold its man-made rubber business to lion copolymer. Barington capital, a radical investor in

, has targeted omniva solutions to promote the sale of the company's surface treatment business, including decorative components functional surfactants for buildings automobiles. "Chemical companies are an easy target for aggressive investors," says zachariades, a

. It is not easy to find that you are in the first or the second business cycle, or you are not in the first or second business cycle. So the question is: Why are you nostalgic about these businesses? The answer is usually not that simple. But what is clear next is that there will be more such activities in 2015. "

bankers believe that CEOs have a high degree of confidence in trading, especially in the US. "Many companies are confident want to grow through acquisitions," said Lel Harrs, managing director of Houlihan Lokey head of the chemical division at

. The balance sheet is bright. European companies are cautious, but in North America, views are generally optimistic. " "CEOs have become more confident more involved in mergers acquisitions, shareholders in the buyout company have responded quite positively," said zachariades "For companies, the main question is: how do we grow? In the past 12 months, the global chemical market has only grown by 2%. CEOs are concerned about whether they can develop a new business that will grow faster than GDP. " Young of


young & Partners believes that, with the continuous improvement of chemical industry revenue, CEOs feel that the sharp drop of crude oil price, the uncertainty of oil price the general weakening of dem in Europe some emerging markets make CEOs feel thatValuations go up the market tends to the seller. "The real result is that the valuation multiples have risen across the board, especially for larger transactions," says

Harrs. Companies with an EBITDA of between $50 million $100 million are selling at a price one or two times higher than they were two years ago. "

Harrs added: "it's a good time to sell assets. Finding assets at reasonable prices remains a challenge for sponsors. Dow is reported to have sold Angus chemicals for about 11 times its EBITDA for the next 12 months. " Joseph Coote, general manager of Alvarez & Marsal, a consultancy firm at

, said: "the attractive valuation of the deal means the environment for divestiture is good." For chemical transactions, the average multiple of enterprise value (EV) divided by EBITDA was 9.2 in 2014, higher than 8.7 in 2013. "Earnings are up, so is the yield multiplier that buyers pay," says

Coote. M & a market is very active, showing a bubble trend. It will become more more difficult for enterprises to obtain more profits or higher private equity returns. "

coatings adhesives will become hot areas. According to several bankers of

, coatings adhesives will become hot areas of trading activities in 2015.

"Since big companies like PPG industry, Sherwin Williams AkzoNobel can influence technology, supply chain br, the scale benefits of chemicals such as paints adhesives have never been as high as they are now, if you're thinking about selling assets, it's the right time," says Beagle of grace Matthews at

. ”Toukan of key Banc, an investment bank with

, said investors would be interested if the end market for chemical assets, such as construction, was attractive. The same situation can be seen in food raw materials other sub sectors. "

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