The pace of global M&A has not slowed down

Since the beginning of this year, the public information of the world's major chemical companies shows that although the macroeconomic situation is not optimistic, the pace of acquisition or sale of businesses in the chemical industry has not slowed down, and transactions exceeding $1 billion in a single transaction abound.

Big deals abound

The biggest deal of the year came in an $11 billion deal
announced by DuPont and Celanese on Feb.
21.
Under the deal, DuPont sold most of its transportation
and materials divisions to Celanese.
After the escalation of the Russia-Ukraine conflict, global energy prices soared, but this did not weaken the willingness of chemical companies to
acquire mergers and acquisitions.
On February 28, U.
S.
chemical giant Ashland sold its high-performance adhesives business to Arkema for $1.
65 billion
.
On March 10, Germany's Bayer AG sold its pest control business to private equity firm Cinven
for $2.
6 billion.
On April 2, Eastman of the United States announced the sale of its adhesive resin business to Sintima Corporation of the United Kingdom for a total transaction price of $1 billion
.
On April 20, DSM announced the sale of its protective materials business to Evante
of the United States for 1.
44 billion euros.
On May 31, DSM announced that it has reached an agreement to sell its engineered materials business to Advent Capital of the United States and LANXESS of Germany for an enterprise value of 3.
85 billion euros.

On June 30, ExxonMobil of the United States sold Clos Tibab Energy Canada for a total cash consideration of $1.
47 billion
.
On July 1, International Flavors & Fragrances sold its Microbial Control business unit to LANXESS for approximately USD 1.
3 billion
.

There are even more deals under $1 billion per transaction, with four in August alone
.
On August 1, Viva Paint sold all assets to the Kansai Helios Group, a wholly-owned subsidiary of international coatings giant Japan's Kansai Paint, including all business activities, brands and employees
.
On August 8, Covestro announced the sale of its additive manufacturing business to Stratasys for approximately EUR 43 million, which includes employees, R&D facilities, production assets and offices in the Netherlands, Germany, the United States and China, as well as an extensive network
of partners worldwide.
On August 9, Huntsman announced that it had reached a definitive agreement to sell its textile dyeing division to Archco, a subsidiary of SK Capital Partners, for a total value of approximately US$718 million, which is expected to close
in the first half of 2023.
On August 26, Japan's Mitsui Chemicals Co.
, Ltd.
sold all of the assets of Mitsui Phenol Co.
, Ltd.
, based on Jurong Island, Singapore, to INEOS for a transaction value of USD 330 million
.

Chemical trading did not decline significantly

According to incomplete statistics from relevant institutions, as of August, the cumulative flow of funds involved in business transfer in the chemical industry at home and abroad this year exceeded 190 billion yuan
.
2022 is not over yet, and how many M&A deals will end up this year is unknown
.
In addition, the chemical, energy, metallurgical and mining cross-business such as renewable energy and lithium battery in the current market is also chased by many traditional chemical companies, and it is expected that the acquisition and acquisition business in this area will continue
.
Overall, although the global economic trend is still uncertain, M&A transactions in the global chemical industry have not declined
significantly.

In addition, for most chemical companies, especially those operating specialty chemicals, selling their business through mergers and acquisitions is a positive "weight loss"
.
The specialty chemicals business involves a wide range of scopes and variety, and manufacturers are constantly adjusting their business areas
as market demand changes.
Since the pandemic, a series of economic trends have put forward new requirements
for the operation of global chemical enterprises.
In 2021, the economy recovered briefly after the epidemic, and the global chemical industry made high profits
.
The hot revenue has brought sufficient funds and full confidence
to the mergers and acquisitions of some chemical enterprises.

More importantly, whether buying or selling, enterprises adjust their business strategies to obtain higher return on investment is always an inherent demand
for chemical companies to acquire and merge.
"Weight loss" allows companies to lose businesses with lower profit margins and leave businesses with higher profit margins, achieving an increase in overall profit margins, which is good for
attracting capital.
Moreover, the low-yield business of some chemical companies is not necessarily a low-quality business, but can still attract the attention and acquisition
of other enterprises.
Divesting non-core businesses to focus on core businesses, or expanding business areas and optimizing asset allocation through asset acquisitions, are decisive factors
for large-scale mergers and acquisitions in the industry.

Some enterprises are resolute in transformation

This year, some companies have undergone a large-scale transformation
.
DSM is one of
the most resolute transformational companies in the industry this year.
DSM sold its protective materials business to Evante in April and to Advent in the United States in May, and to LANXESS of Germany and Advent Capital
of the United States.
But DSM didn't just "cut meat", and on the same day that the engineered materials business was sold, DSM merged with Firmenich to form a new DSM-Firmenich company focused on nutrition, beauty and health
.
The new company will consist of
the Perfume Division, the Food Ingredients and Fragrances Division, the Health, Nutrition and Care Division, and the Animal Nutrition and Health Division.
Obviously, DSM lost its materials business and became the leading industry giant
in the fragrance, flavor and feed business.
After the transformation, DSM launched a new round of in-depth cooperation
with New Zealand dairy giant Fonterra.

Bridgestone, a well-known tire manufacturer in Japan, is also an enterprise
that is accelerating its transformation.
Since the beginning of this year, Bridgestone has sold a number of synthetic rubber plants, divested a number of non-tire businesses such as the conveyor belt business, but at the same time invested more production capacity in the segmented tire product market
.
In fact, these reforms were clearly announced in Bridgestone's medium-term business plan for 2021, and the company has long planned to reform its expense and cost structure to further improve and optimize the efficiency of
procurement and logistics in all regions.