Mergers Seen Rising In 2013

Despite concerns about the debt crisis in Europe and slow economic growth around the globe, chemical acquisitions are expected to increase in 2013 compared with 2012, according to a survey of company executives conducted by the consulting firm A. T. Kearney. Three main factors will drive deal-making during the year: the availability of low-cost financing, growth strategies focused on Asia and other developing regions, and the desire to access low-cost feedstock in North America, the firm says. In addition, surveyed executives report that they expect an increase in acquisitions of companies positioned further down the value chain, particularly in specialty and fine chemicals. Large chemical firms in developing countries—such as China’s Sinopec, Saudi Arabia’s Saudi Basic Industries Corp., Brazil’s Braskem, and Thailand’s PTT—are likely to target downstream businesses in the U.S. as part of their growth strategies. Meanwhile, consolidation of the fragmented chemical markets in Asia should also drive merger activity this year, according to Kearney. In Europe, the outlook is mixed, reflecting investors’ concerns about the region’s economic woes.