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Ennovance Chemical M&A


1H-2010 M&A

1H-2010 M&A

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  • 1. M&A Activities: 1H - 2010
    Ennovance Capital LLC
    Specialty PE Firm
    Operational Focused, Niche Chemical and Related Industries PE Investor
  • 2. Statistics: 1H - 2010
    M&A Deal Activity for Global Chemicals Sector Up 45% in First Half of 2010 Over First Half of 20091
    Total Deals:
    • Chemicals 788
    • 3. Total Value2$ 83.5 b
    • 4. Average Deal Value (515 deals) $162mm
    • 5. Pharmaceuticals 713
    • 6. Total Value3 $ 78.2 b
    • 7. Average Deal Value (515 deals) $150mm
    Note: 1 Pwc source; 2, 3 Includes all types of deals
  • 8. Chemicals 1H -2010
    • The Deal activity in first half of 2010 went up both in the number of deals and in transaction value compared with the same period in 08’ and 09’
    • 9. Total deals in 2010 788
    • 10. Total deals in 2009 542
    • 11. Total deals in 2008 806
    • 12. Total deals in 2007 336
    • 13. Total deals in 2006 317
    • 14. The value of transaction has almost doubled since 2009 and increased by 2.5 time since 2008
    • 15. The real activity is even higher than data suggests due to the longer process of deal making in the post recession period.
  • 16. Deal activity by the number of deals2006-2010, H1
    • The number of deals went up by 117 deals
    • 17. The focus has shifted toward small (under 100 million) and middle size deals (100-500 million)
    • 18. Reason: Due to the economic downturn, the companies are more focused on their core businesses and tend to acquire divestitures rather than whole companies to strengthen their performance
    • 19. The acquisition of the divestitures have a higher proof of success for buyers and sellers
  • Transaction types in Chemicals
    • Sharp decrease in bankruptcies, BuyBacks
    • 20. The number of IPOs has doubled since 2009 and tripled since 2008
    • 21. A steady increase in Shelf registration across the years
    • 22. As the financial situation improves, we observe many solvent companies willing to exit through IPOs.
    • 23. The increase in IPOs demonstrated the strengthening demand for chemicals from the institutional investors – good news for PE firms.
    • 24. However, due to the existing uncertainty in the current market, many are still waiting for more profitable conditions and complete Shelf registration with the expectation to exit in the next 3 years.
  • 25. Transaction types in Pharmaceuticals
    • With the improvement of the economy, only 7 bankruptcies were announced in 2010
    • 26. The number of IPOs, Shelf registrations, and M&A activities stays in line with the numbers from 2008/2009
    • 27. The increase in M&A transaction is expected to become stronger in 2H due to the overall improvement of the economy and easier access to credit
    • 28. A 2009 tend of going private and abandoning the public shares is expected do be slowing down in H2 of 2010 as the financial performance of many improves
  • 29. Most Active Sellers (Ultimate Parent) Pharmaceuticals, 1H - 2010
    # of deals
    Total Value Sold
  • 30. Most Active Sellers (ultimate parent) Chemicals, 1H 2010
    # of deals
  • 31. Chemical Industry trends and outlook
    Chemical companies are operating below their capacity
    Higher M&A activity, increased competition and more deals made by specialty PE firms
    New or Green Technologies
    New Opportunity due Regulation and Climate Change
  • 32. Pharmaceuticals: Trends and outlook
    Strong activity in cross border deals
    Weak M&A activity in the US and EU in comparison with previous years
    A flood of companies “exits” is expected from the PE firms as a result of the PE investments earlier in the decade.
  • 33. Market for M&A Today:
    Deal Catalysts:
    Economic downturn: the existing market conditions offer a wide spectrum of opportunities for M&A in Chemicals
    Acquire companies thorough potential partnership approach
    Sellers generate more 13% more profit
    The acquisition of the divestiture in 57.7% generate positive returns as opposed to 41.7% when buying the whole company
    Long value chain and complex industry; …creates opportunity for industry experts, deep knowledge with extensive network
    Environmental risks is a fear for generalist investor
    Falling stock market works both ways
    Focus on value instead of a deal price or multiples
  • 34. Remarks
    Due to confidential and proprietary nature, Ennovance Capital published only a few slides.
    Sources used:
    Primary market research
    Secondary data sources includes, but not limited to Capital IQ, Thomson One Banker, VC Experts, and various industry related reports etc.
    Phone: +1 (800) 901-1006