February 28, 2024

Chemical M&A to Accelerate

Chemical Sector to See Increased M&A Momentum, Brenntag’s CEO Says

Published: Feb. 27, 2024 at 10:02 a.m. ET

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By Stefanie Haxel

The global chemical sector might see increased momentum in mergers and acquisitions, according to Brenntag’s chief executive officer.

The head of the German chemicals company, Christian Kohlpaintner, said in an interview with Dow Jones Newswires that dealmaking in the chemical industry seems to be accelerating, as reflected in the size of acquisitions being implemented.

“If you look at the top 50 distributors, in a short period of time, I would say in the last seven or eight years, they have increased their market share from 30% to almost 40%,” Kohlpaintner said, which he accredits to aggressive acquisitions.

Brenntag had doubled its acquisition budget in the fall of 2022 to between 400 million and 500 million euros ($434.1 million-$542.7 million) a year.

Although many players in the industry have grown significantly through acquisitions in recent years, the economies of scale aren’t enough to have a positive impact on manufacturers.

“This is the reason why, in our opinion, the consolidation of the market will occur at a higher speed and in larger steps,” Kohlpaintner said.

According to data from the Boston Consulting Group, the market for industrial chemicals is growing between 2% and 4% annually, and that for specialties is growing by 3% to 5%.

–Nina Kienle contributed to this story.

Write to Stefanie Haxel at stefanie.haxel@wsj.com

https://www.marketwatch.com/story/chemical-sector-to-see-increased-m-a-momentum-brenntag-s-ceo-says-99bbc6d3

February 22, 2024

The Latest from Adnoc

Adnoc to Progress in Covestro Talks Ahead of Potential Bump

Eyk Henning and Dinesh Nair, Bloomberg News

Colored foam samples made from toluene diisocyanate (TDI) sit in this arranged photograph at the Covestro AG chemical park in Dormagen, Germany, on Wednesday, May 9, 2018. Bayer AG sold its remaining stake in Covestro, raising 2.2 billion euros ($2.6 billion) as the German drugmaker closes in on the planned $66 billion purchase of genetically modified seeds supplier Monsanto Co. Photographer: Dario Pignatelli/Bloomberg , Bloomberg

(Bloomberg) — Abu Dhabi National Oil Co. is inching toward an improved bid for Covestro AG after finding a potential way to resolve the impasse over its €11.3 billion ($12.1 billion) pursuit of the German chemical maker, people familiar with the matter said.

Adnoc is working with a consulting firm that’s sent dozens of questions to Covestro about the details of its operations, according to the people. The responses could give the Abu Dhabi-based energy giant enough information to improve its bid to slightly more than €60 per share, the people said, asking not to be identified because the information is private.

Shares of Covestro jumped as much as 8.1% in late Frankfurt trading Thursday. They were up 4.8% at 5:35 p.m. in Germany, giving the company a market value of about €9.4 billion.

In December, Adnoc improved its non-binding offer to €60 per share, up from previous proposals of €57 and €55, Bloomberg News has reported. The latest increase wasn’t enough to win over some parts of Covestro’s supervisory board, which thus hasn’t granted Adnoc full access to its data room, the people said. 

While Adnoc executives were struggling to justify another bump without access to proper due diligence, Covestro’s responses to the latest questions may help bridge the gap, the people said. It’s still unclear how much Adnoc may be willing to increase its bid and whether it will be enough to win over Covestro.

Deliberations are ongoing, and there’s no certainty they will lead to a deal. Representatives for Adnoc and Covestro declined to comment.

Adnoc has been pursuing Covestro since the middle of last year, part of the Abu Dhabi company’s push to diversify internationally. Its overtures come as the European chemical industry struggles with the region’s anemic growth and a weaker-than-expected rebound in China.

Producers including Lanxess AG and BASF SE warned of disappointing earnings last year. Covestro will announce its full-year results on Feb. 29, when investors also expect it to provide an outlook for the current year and beyond. 

Covestro indicated in November it’s on track to generate about €1.4 billion in earnings before interest, taxes, depreciation and amortization in 2024, well below the €2.8 billion it said it could achieve under average market conditions. 

(Updates with share movement in third paragraph.)

https://www.bnnbloomberg.ca/adnoc-to-progress-in-covestro-talks-ahead-of-potential-bump-1.2038028

January 29, 2024

Arsenal Capital Invests in Polycorp

January 29, 2024

Holcim to Spin Off North American Business

Holcim jumps on $30bn plan to spin off North American unit

Holcim Ltd shares jumped after the Swiss cement maker said it will spin off its North American unit into a separate US-listed entity, a move that could unlock a higher valuation for the business.

This content was published on January 29, 2024 – 13:37 January 29, 2024 – 13:37

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The US arm had about $11 billion in sales last year — about one-third of Holcim’s total — and could be valued at more than $30 billion, the company said. Holcim shares climbed as much as 14% in early trading, the most since March 2020, and were up 4% as of 12pm Zurich time, valuing the entire company at almost CHF39 billion ($45 billion).

US listings have become increasingly appealing to European companies as a wider investor base and bigger pool of capital offer the prospect of higher valuations. Holcim’s move for its US division follows the decision of fellow materials giant CRH Plc to shift from London to New York last year. 

Reacting to the news, Citigroup Inc. analyst Ephrem Ravi noted that US-listed building-product companies trade at a significant premium to European-listed peers. Zuercher Kantonalbank analyst Martin Huesler calculated the US business’s fair value at around $35 billion to $40 billion.

“It is a big advantage to have a customized capital structure for this business and to be in the US dollar,” Holcim Chief Executive Officer Jan Jenisch said in an interview on Monday with Bloomberg Television. 

Jenisch is stepping down from his role as CEO, and will be replaced by Miljan Gutovic, currently the head of the European business. Jenisch will remain chairman and lead the planned US listing of the North American business. He said the company would consider buybacks to help smooth the transaction.

The US market is growing at a rapid pace as builders race to relieve a chronic lack of single-family homes and meet regulatory pressures for more energy-efficient buildings. The unit expanded through an acquisition spree that broadened its offering of building materials. 

Holcim says the North American business is the No. 1 player in cement and No. 3 in roofing, and it aims to roughly double sales to about $20 billion by 2030.

Jenisch said the US housing market has great momentum, while downplaying risks of policy changes in case of a reelection of Donald Trump in the US presidential election in November. He said “economic policy is very consistent” and infrastructure and housing will remain a priority.

“We have a rockstar business in the US,” Jenisch said. “We will have a very strong capital structure for both companies so plenty of headroom to support the US listing.”

https://www.swissinfo.ch/eng/business/holcim-jumps-on–30bn-plan-to-spin-off-north-american-unit/49167234

January 10, 2024

Q4 Chemical M&A Activity

Chemical Deal Results

http://www.chemicaldeals.com/Results.aspx?searchtext=&quarter=4th+Quarter+2023