Post Dow-DuPont, chemical deal-making waned as 2016 advanced

A few big chemical deals were inked during the year, but it was hardly the frenzy observers were expecting

Alexander H. Tullo

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Chemical deals lead mergers
Buoyed by Bayer’s planned $66 billion acquisition of Monsanto, the chemical industry led global merger activity through the first three quarters of this year. Overall, deal-making fell 22% to $2.37 trillion compared with last year.
Sources: Thomson Reuters, New York Times

After Dow Chemical and DuPont announced plans to merge in late 2015, chemical industry watchers predicted that the year ahead would bring an unprecedented blizzard of deal-making.

Speaking before the IHS World Petrochemical Conference in March, Scott Kleinman, lead partner for private equity at Apollo Global Management, was certain that big companies would keep buying each other.

“I think you are going to see deals you thought would never happen happen this year,” Kleinman concluded.

There were indeed copycat deals. ChemChina launched its acquisition of Syngenta in February. In May, Bayer was making overtures, not consummated until September, for Monsanto.

However, by the third quarter, merger and acquisition activity had cooled. According to the consulting firm PricewaterhouseCoopers (PwC), 23 transactions were announced in the chemical industry during the July–September quarter, a decline of 47% versus the quarter before.

 PwC blames uncertainty. “We saw deal-makers take a pause, anxiously waiting for the Fed’s decision on interest rates and the outcome of the U.S. presidential election,” the firm said in an October report.

 

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