Chemical deals to surge

Global chemical industry merger and acquisition activity is surging in 2016 and is likely to outstrip 2015. With the pending combination of Dow Chemical and DuPont and ChemChina’s $43 billion deal to buy Syngenta, 2016 is on track to be a record year, according to a report from management consulting firm A.T. Kearney. The combined value of those two deals alone sets up the industry to surpass 2015 acquisitions totaling $110 billion and top the previous industry peak of $151 billion in 2011. Megadeals, such as last year’s $17 billion acquisition of Sigma-Aldrich by Merck KGaA and ChemChina’s $9 billion purchase of Pirelli, have been driving up overall deal value, but Kearney says deal volume should also increase in 2016. In 2015, 1,003 deals closed, down 3% from 2014. Hedging its bets, investment banking firm Valence Group says 2016 could be close to another record year. Given healthy chemical company balance sheets and limitations on organic growth in the current economy, Valence says many firms will try to expand through acquisition in the months ahead.