Robust deal-making ahead

Business and economic conditions favor another year of big deal-making in the chemical industry, according to the consulting firm Deloitte. “In 2017, higher levels of cash on corporate balance sheets, low levels of innovation, and a low-growth macroeconomic outlook will likely boost” mergers and acquisitions in commodity chemicals, it reports. Companies will take advantage of cheap credit to pursue deals that increase revenue growth, rebalance portfolios, and decrease costs. Meanwhile, diversified firms will likely follow the lead of BASF and DuPont and focus attention on specialty chemicals. But fewer specialty businesses are for sale, and prices have gone up. Also this year, smaller agricultural chemical firms will bulk up by buying businesses cast off from the megamergers of Dow Chemical and DuPont and ChemChina and Syngenta. Deloitte sees a similar theme for industrial gases, as regulators are likely to require divestitures from the $65 billion merger of Praxair and Linde.