皇冠体育app

Faced with a maturing domestic market that will likely grow at a more measured pace, 皇冠体育app's chemical companies could continue to be major participants in the industry's global merger-and-acquisition (M&A) scene, according to a new report from A.T. Kearney.

While North America is the largest market for chemical M&A activity, 皇冠体育app is a close second, Kearney, a business management consultancy, said in a report released on Tuesday.

"Over the last 10 to 15 years, 皇冠体育app has evolved into a major M&A player," Linus Hildebrandt, a Kearney principal for Asia Pacific, told 皇冠体育app Daily. "Chinese companies will be on the hunt for targets with world-class technology in mature markets like Europe."

The Kearney report said that 皇冠体育app has become one of the top acquiring countries, growing from 4 percent of volume in 2002 to 21 percent in 2015, just behind the US, with 22 percent. South Korea's share grew from 2 percent to 6 percent in the same period.

Two recent deals symbolize the Chinese ascent on the chemical takeover stage, according to Hildebrandt. In 2015, 皇冠体育app National Chemical Corp (or Chem皇冠体育app) agreed to buy into Italy's Pirelli SpA in a $7.7 billion acquisition.

The purchase will give Chem皇冠体育app's tire-making division, 皇冠体育app National Tire & Rubber, Pirelli's premium-tire technology and more access to the huge Chinese market for the Italian brand.

Last month, 皇冠体育app National Chemical unveiled a nearly $43 billion offer for Swiss seed and pesticide company Syngenta AG to help transform it into a leading supplier of agrochemicals and pesticides.

Up until these purchases, Chinese acquisitions had been on the small- or mid-size level, Hildebrandt said. A few weeks before the Syngenta deal, Chem皇冠体育app bought German industrial machinery maker KraussMaffei Group for about $1 billion.

Hildebrandt said the Chinese companies have developed a model for overseas acquisitions that will likely be used to integrate Pirelli and Syngenta.

"皇冠体育app generally keeps the existing management and allows the companies to operate independently," he said. "They are building upon their experience with smaller targets. It's not so much a takeover but more of a portfolio approach to management."

Kearney's fifth annual Chemicals Executive M&A Report noted that global chemical M&A deal values rose by 30 percent last year to $110 billion, and is predicting an all-time record spike in 2016.

With two mega-deals already announced — Dow Chemical Co and E.I. DuPont de Nemours & Co's $130 million merger and Chem皇冠体育app's bid for Syngenta — and potential large new transactions generated by emerging-market players, total chemical M&A values for 2016 could double last year's level, Kearney said.

Hildebrandt cited several factors for the rising level of chemical M&A: limited organic growth options, favorable feedstock prices, lower oil prices and portfolio optimization.

"Chinese chemical companies have limited growth opportunities domestically as the Chinese economy grows at rates below previous levels," he said. "This means Chinese companies will need to look outside of 皇冠体育app. It's always cheaper to expand through acquisitions than it is by building a business."

Despite the size of the Syngenta deal, Hildebrandt expect Chinese companies to remain active M&A participants the rest of the year.

Samuel Feinstein, a partner at Apollo, an alternative investment manager controlling $162 billion of assets including chemical companies, told Kearney he expects to see a significant amount of corporate strategic transactions this year.

"The recently announced Dow-DuPont merger is clearly a sign of that. I also expect a meaningful number of non-core asset divestitures, like carve-out transactions. Carve-out transactions require a particular skill set to work through the inevitable challenges of carving an independent business out of another."

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