Global M & A market of fine chemicals becomes weaker

 In this regard, despite the increasing number of the global chemical M & A transactions in 2011 than in 2010, it has begun to show signs of fatigue. With the uncertainty of the global economic outlook concerns from investors and financing difficulties exacerbated, global chemical M & A market may gradually come into weakness from the triumph.

Strategic investors to acquire the specialty chemicals business increased interest to stimulate a strong recovery in the global chemical industry mergers and acquisitions this year. The dust has settled following the whole year of 2010 reached 65 transactions, three quarters of 2011 there were 61 mergers and acquisitions, the transaction amounted to $ 64 billion than $ 39 billion for the same period in 2010 increased by approximately 40%, which is also nearly few years, a rare situation in the global chemical M & A market. The impressive performance of the 2011 first three quarters of the global chemical M & A market has peaked in terms of quantity or amount. However, data show that open the third quarter of 2011, 16 mergers and acquisitions, the total amount of $ 11.3 billion, far below the $ 34 billion in the second quarter of 23. Decreasing trend has not stopped since the end of September to mid-November, only five of a total of $ 506 million M & A transactions completed.

However, the reduction in M & A transactions is essentially different from the 2008 financial crisis. The potential fine chemicals wholesalers are not a lack of cash flow to support the contrary, they are holding large amounts of cash, and have the ability to continue to profit. However, as part of the chemical companies will need to purchase raw materials and intermediates are already being felt due to the upstream capacity utilization is difficult to raise the pressure brought about by rising raw material prices, coupled with severe economic downturn affecting corporate profits and cash flow of the lesson, the better ready to withstand the liquidity crisis is the current situation, potential investors should first solve the problem. No more bright news came out of the future economic situation, inaction is the stalling tactics of the potential investors.

Since the 2008 financial crisis, global chemical company to take cost-cutting measures, which allowed them greater leeway in the current market conditions. But now the global economy, the economic downturn of the mentality of investors cast a thick layer of haze. Although the feasibility of debt financing has not been questioned, but under the influence of the European debt crisis spread, the economic outlook mist heavy stock prices so that the chemical copper chromite (CC) company's market value, also the CEO of the potential investors on pins and needles, because this led to a substantial M & A valuation premium. The key to the future trend of chemical M & A market is not its own internal how to adjust, but the external economic environment may have on the chemical industry had great impact.

Although the pace of global chemical industry mergers and acquisitions has become slow, from the experience of history, the true freezing point of chemical M & A market is on the different transaction price that buyers and sellers expect to appear. However, from the current situation of market performance, it is not yet to come. Perhaps now it is a good period for mergers and acquisitions market restructuring.

Source:http://www.mhcfm.com