In the drive to reach growth objectives, or to maintain and enhance “critical mass”, mergers & acquisitions (M&A) has been a theme for the chemical distribution industry for years. The industry leaders (by size and geographic reach) were all built through a series of such transactions. As the practice is further trickling down to the smaller and mid-sized company layer of the sector, and more distributors espouse external growth options, it is worthwhile to spend some time on a reflection of recent events in this context.

Although M&A activity has been slowed down to some extent by the Covid-19 pandemic, the basic drivers are still relevant. Thus, it can be expected that industry consolidation will even be accelerated by the effects of the global lockdown that has been causing a global economic crisis, disruptions in international trade, production outages, and thus stressed supply chains.

Other factors such as the digital and ecological transformation of the chemical industry and its impact on value chains, trade conflicts, or Brexit will even increase the need to enhance critical mass and establish more widespread networks – and thus build more resilient businesses.

CHEManager asked executives and industry experts to share their views on the rationale for M&A activity in chemical distribution. We proposed to discuss the following aspects:

• Have the key drivers for mergers & acquisitions in the chemical distribution industry changed due to the Corona crisis?
• Will industry consolidation and thus M&A activity continue or even speed up after the Corona crisis?
• Do you want to play an active role in the industry consolidation, and if so, what is your strategy?

Peter Stockmeier: At the beginning of the Corona crisis, Stockmeier decided to put all ongoing M&A activities on hold in order to see the impact of the pandemic. Fortunately, the past business year was very successful, allowing us to resume our activities in this area.
We expect the consolidation in the world of distribution will continue and that the current Corona situation will have little influence on this. The requirements for our industry through regulations such as the Biocide Regulation, but also topics such as sustainability, supply chain laws, etc. are increasing. In addition, we are investing in the area of digitalization. All this causes costs that are easier for a larger unit to handle.

“Consolidation will continue and
the current Corona situation will have
little influence on this.”

Stockmeier has shown successful growth over the last 2 decades, both organically and through various acquisitions. We will continue this course and further expand our strong position in the European chemical distribution market. As a family-owned company, we want to be a reliable partner for our principles and customers operating throughout Europe, and we will continue to strive for this goal on a long-term basis.