Chemical merger activity rebounds in first quarter

Chemical merger activity rebounded in the first quarter compared with the fourth quarter of 2018 on the strength of two megadeals: Saudi Aramco’s $69 billion purchase of a majority stake in petrochemical maker Sabic and Merck KGaA’s $6.5 billion acquisition of electronic materials firm Versum Materials. According to PwC’s Global Chemicals Deals Insights: Q1 2019 report, total deal value of $86.3 billion in the first quarter was higher than in any quarter last year and 6.3 times as high as in the fourth quarter of 2018. Buyers shrugged off trade tariffs and Brexit concerns during first-quarter dealmaking and focused on economic stability and record levels of available cash, PwC says. The advisory firm predicts continued strong merger and acquisition activity for the rest of the year, driven in part by restructuring at large chemical companies and private equity investors looking to sell portfolio companies they have held for a number of years. The average size of the 168 deals in the first quarter was $1 billion; excluding the Sabic transaction, deal size would have been around $100 million, about the same as in the previous quarter, which included 234 deals. Private equity activity remained steady at about one-third of deal volume.