Major Japan-based chemical companies have released their consolidated results for the fiscal first nine months, ended 31 December.
Fourth-quarter M&A deal activity declined substantially from the year-ago quarter as 2018 drew to a close, according to CW's M&A data.
A broad decline in equity markets in recent months, especially in the second half of 2018, has resulted in tumbling prices for chemical stocks.
Chemicals M&A in Asia is in a state of flux as China — the region's most important market – responds to the Trump administration's confrontational trade policies, as Japanese buyers look abroad and the industry in multiple countries looks to move downstream.
Persistently high valuation multiples have done little to stymie M&A in the growing flavors and fragrances (F&F) market. One of 2018's biggest chemical deals—IFF's $7.1-billion acquisition of Frutarom—catapulted IFF into a near-tie with Givaudan for the largest F&F company by sales.
Announced chemical M&A volumes and values diverged on a year-on-year (YOY) basis during the third-quarter of 2018, with deal volumes down 5.9% and deal values nearly doubling.
Emerging regulatory hurdles, around both national security and antitrust issues, are throwing up roadblocks to M&A transactions and complicating due diligence, observers say.
Is M&A truly becoming cheaper after years of high multiples?
Keeping track of the fast-moving US-China trade policy developments. Watch it on demand
Optimizing chemical companies’ portfolio management. Watch it on demand
Chemicals M&A continued its years-long bull run in 2018. As of 17 December, 253 deals were announced in 2018, amounting to about $80.4 billion in value.
One critical risk in the coming year is the sharp drop-off in world trade growth, which fell from a pace of above 5% at the beginning of 2018 to nearly zero at the end of the year, according to IHS Markit estimates.
Global energy companies are accelerating chemical investments as forecasters call for a decline in growth in demand for refinery fuels.