Polyurethane M&A Update

PUdaily, Shanghai-During the first half of 2016, the global chemical industry mergers and acquisitions (M&A) are flourishing with transaction amounting up to USD 143.3 bn, according to Reuters. This wave also involves polyurethane industry and there are many M&A taking place in this six months, for example, the joint polyurethane company built by Mitsui Chemicals and SKC, the mergers between Dow and DuPont, which was regarded as the biggest M&A in history and the potential acquisition between Linde and Praxair.

In order to strengthen the competitive power and improve their industry positions, some enterprises choose merger or acquisition, that’s why M&A are emerging one after another.

The following are PUdaily opinions on the acquisitions in polyurethane industry:

Benefits Maximization

Most mergers between two or more sides are based on complementary business, so that they can cooperate to improve and benefit each other, which is called win-win cooperation. For instance, Mitsui Chemicals emphasizes on isocyanates business while SKC pays more attention to polyols market, and both sides have many system houses at different places of the world. Therefore, through mergers they can take advantage of each other’s strengths to expand business. Moreover, they can get more raw material resources and enter into broader downstream market.

Business Concentration

Companies also can expand related business size through M&A so that they can expand their market shares by improving their competitiveness, such as BASF, which sold the industrial coatings business to Akzo Nobel and bought Guangdong CoilABC, is vigorously developing automobile business, which is witnessed by the foundation-laying of Shanghai base of automobile coating production.

Better Independent Separation

After acquisitions, some companies choose to divest related businesses again, so that they can focus full-time attention on a specific industry. Take Huntsman as an example, the company completed acquisition of the titanium dioxide business with Rockwood in 2013. Recently, Huntsman indicates that it will divest this business and make it become an independent listed company, which will be completed in early 2017.

Another example, when Dow and DuPont combined, the company expressed that they are seeking for tax-free split into three independent listed companies including agricultural, materials science and specialties. Each company will be strong and have its own business focus, unique competitive position and product portfolio. The three companies will all be outstanding around the world.

PUdaily analysts predict that the M&A will continue in polyurethane industry and involve the whole industry chain. 

  Global M&A List in the First Half of 2016