A surge in chemicals megadeals is approaching—with deals worth more than $300 billion poised to reshape the industry.

1. Chemicals Executive
M&A Report 2017
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2. A surge in chemicals mega deals
is approaching—with deals
worth more than
$300 billion poised
to reshape the industry.
Chemicals Executive M&A Report 2017
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3. The value of completed
deals in 2016 declined
slightly compared with
2015—but the backlog
of deals is at a level never
seen before with more than
$300 billion of potential
transactions.
Chemicals Executive M&A Report 2017
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4. In the past 10 years,
not one chemicals deal
exceeded $20 billion.
The 2017 pipeline holds
a number of huge deals,
including four valued at
between $40 billion and
nearly $70 billion each.
Chemicals Executive M&A Report 2017
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5. 1Reuters as of February 8, 2017 4manager magazin as of February 6, 2017
2Reuters as of December 13, 2016 5World Fertilizer magazine as of November 9, 2016
3Reuters as of February 8, 2017
Sources: Dealogic, Reuters, manager magazin, World Fertilizer; A.T. Kearney analysis
Dow–
DuPont
(2015)
Top 10 completed and pending deals 2007–2016
($ billion)
69
Bayer–
Monsanto
(2016)
66
Chem
China–
Syngenta
(2016)
47
Praxair–
Linde
(2016)
43
Access–
Lyondell
(2007)
19
Dow–
Rohm
& Haas
(2009)
18
Potash
Corp–
Agrium
(2016)
18
Merck–
Sigma
Aldrich
(2015)
17
Akzo
Nobel–
ICI
(2008)
16
Air
Liquide–
Airgas
(2016)
13
Chemicals Executive M&A Report 2017
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Pending
Completed
Approval by European Commission pending1
Deal completion expected by end 20172
Deal completion expected by second quarter of 20173
Deal completion expected
by mid-20175
Deal in early stage, Business Combination Agreement planned
for May 2017, deal completion up to 15 months afterward4

6. The outlook for Chemicals
M&A overall is strong with
growth expected by largest
M&A players in China and
United States and increased
activity as a result of increased
consolidation and specialization
rewarded by investors.
Chemicals Executive M&A Report 2017
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7. 1 The share of answers stating a stable outlook is not displayed.
Sources: A.T. Kearney executive survey; A.T. Kearney analysis
Development of M&A activity by regions
Share of answers in executive study1
Chemicals Executive M&A Report 2017
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Decline
Increase
North America
61%
Western
Europe
26%
Rest of Asia Pacific
23%
Eastern Europe
(Central and Eastern Europe
and the Commonwealth
of Independent States)
24%21%
Japan and Korea
China42%
India
39%
Middle East
and Africa
27%21%
Latin America
26%31%
11%
14%
6%
14%
9%
26%17%
Overall
46%3%

8. Note: EV is enterprise value. EBITDA is earnings before interest, tax, depreciation, and amortization.
Sources: Bloomberg; A.T. Kearney analysis
Investors are rewarding solution-focused chemicals companies
with higher multiples than broad-based companies
EBITDA % vs. EV/EBITDA multiple of top chemicals companies,
average 2014–2016
Chemicals Executive M&A Report 2017
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Feedstock-focused
Broad-based
Solution-focused
0
5
10
15
20
25
30
35
4 6 8 10 12 14 16 18 20
EV/EBITDA
EBITDA(%)
Feedstock-focused
commodity companies:
Higher EBITDA margin than
broad-based companies, but
lower EBITDA multiples
Solution-focused
specialty companies:
~60% higher EBITDA than
broad-based companies
and ~60% higher
EBITDA multiples
Broad-based “classical
chemical” companies

9. 1 Company allocation to segments defined by Capital IQ classifications and industry reports, followed by manual screening: agrochemicals and fertilizers split into separate segments
Sources: Capital IQ, Dealogic; A.T. Kearney analysis
Chemicals companies are consolidating key value chains and
segments to increase market reach, capability, and efficiency
Level of consolidation by revenue, not including pending deals1
Chemicals Executive M&A Report 2017
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Industrial gas Agrochemicals Paints and coatings Fertilizers
40%
60%
46%
54%
38%
62%
Top five companies
Next 15 companies
14%
86%

10. Global financial and macroeconomic
conditions could affect M&A activity:
• More emerging market companies are turning
to acquisitions to gain access to technologies
and expertise
• Lower feedstock costs and downstream
integration are expected to drive deals
• Economic volatility and slower global GDP
growth could dampen activity
• The continued uncertainty and volatility of
oil prices could also impede deals
Chemicals Executive M&A Report 2017
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11. 1Percentage of respondents who stated either driver or impediment
Sources: A.T. Kearney executive survey; A.T. Kearney analysis
Several drivers support continued M&A, but chemicals executives
see economic volatility as a potential disruptor
Top drivers and impediments of future M&A activity,
share of executives selecting trend1
Chemicals Executive M&A Report 2017
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Drivers
Impediments
37%Increasing economic volatility
Emerging market firms seeking access to
advanced technologies or application know-how
Resurgence of US chemicals industry because of low-cost feedstock
Downstream integration of Middle Eastern petrochemical firms
Limited returns on organic investment options
Balance sheet strength and liquidity of chemical companies
29%Politically driven interventions
31%Current level of valuations and multiples
30%Oil price
27%Global GDP growth
82%
61%
58%
57%
55%

12. Chemicals Executive M&A Report 2017
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