(CHEManager Europe 7-8/2012)    M&A Value and Volume
The global chemicals and materials sector - which covers an eclectic mix of subsectors including petrochemical bases and derivatives, agrochemicals, fine chemicals and food additives - was hit hard by the drying up of the credit markets in2009. M&A came to a virtual halt that year. But a new study of worldwide M&A activity in the chemicals and materials sector conducted by global legal practice Squire Sanders in association with M&A intelligence service Mergermarket shows a rebound in deal making activity with deal value reaching its highest level since 2007 (Fig. 1). In 2011 chemicals and materials M&A increased 16% in volume and 56% in value from 2010 to reach 409 deals worth a combined $93.8 billion globally.

Regional insights: targets
From a regional perspective, more than one-third of M&A targets (Fig. 2) came from Western Europe (34%) in 2011 and 2012, followed by the Asia-Pacific region with 28% and North America with 22%. Strategic acquirers' appetite for growth in emerging markets has been a defining feature of the chemicals and materials industry in recent years, and is illustrated quite clearly by some of 2011's largest transactions: the $6.4 billion acquisition of Rhodia by Solvay aims to strengthen the combined entity's presence in emerging markets, while the $4.6 billion acquisition of Solutia by Eastman Chemical is part of its strategy of expanding into the Asia-Pacific region.

Regional insights: bidders
Looking at the most active bidders (Fig. 3), Western European and North American acquirers both accounted for 32% of announced deals, while the Asia-Pacific region accounted for just under one quarter. However, emerging market players have been active acquirers. Cross-border M&A increased by 9% in volume and 152% in value from 2010 to 2011, and Asia-Pacific investors - particularly state-backed entities with an insatiable appetite for raw materials, technology and innovation - played an important role in boosting these figures. In one of 2011's most notable deals, China National Agrochemical Corporation acquired a 60% stake in Israel-based Makhteshim Agan Group (MAI) from Koor Industries.

M&A deal size trends
While the multi-billion dollar deals naturally draw the most media attention, the most substantial amount of M&A activity can be found in the lower mid-market, where deal volume in 2011 totaled 88, up from 74 in 2010. And it is these deals that demonstrate just how fragmented the market remains and just how many opportunities exist for mid-market acquirers, both strategic and financial. Corporate disposals and private equity exits should continue to drive chemicals and materials M&A through 2012, particularly if eurozone uncertainties are eased. The year so far has seen around 100 chemicals and materials deals worth $16 billion globally, with about 43% of total deal volume coming from the $15 million to $100 million range.

Sources: Squire Sanders, Mergermarket