China Falls Behind in Chemical-Industry Mergers This Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--In the first half of 2007, the pace of merging among chemical companies slowed in China. Transactions totaled less than $50 million. However, globally, the trend of merging maintained its momentum from 2006.

Statistics show that in 2006 and also in the first half of 2007, the Asia-Pacific region has become the hot spot for smaller (under $50 million) mergers. But so far, it does not look like the transaction value will exceed that of 2006. The pace of merging in Brazil, Russia, India and China slowed in 2007, though the transaction total in Russia and Brazil will exceed that of 2006. So far, merging transactions this year have focused on specialized chemicals. The total value of merging in this area amounted to $28 billion in 2006. In the first half of 2007, the total in this area amounted to more than $40 billion. In addition, it is estimated that merging in household-use chemicals will surge and exceed the total of 2006.

PWC Chemical Services Director Saverio Fato said the publicized high value of chemical mergers is proof enough that chemical companies are utilizing the current economic situation to reshuffle product lineup and/or stock-holding structure. However, the impact associated with the changes in financing market has not shown itself fully. At the same time, since private financers are the key investors in high-value merging transactions, as they seek exit from their investment, more high-value transactions are on the way. Financial market changes will influence the form and timing of the exit by the private financers.

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