Cautious and targeted approach to acquisitions
Within the chemical industry, strategic buyers and investors have been showing considerable interest in the paints and coatings segment for several years. And thus the industry remains an attractive segment for acquisitions. Strategic investors strengthen their portfolios through targeted investments and divestments in order to focus on their specific niche. Financial investors often act as buyers in carve-outs of larger companies. In other words, the spin-off, spin-off or sale of parts of a company to form a legally independent entity.
The industry has been consolidating for 20 years and this development peaked in 2021 in terms of mergers and acquisitions. Last year, activity weakened significantly in some areas, falling by a third.
Transaction activity on the rise
Whether this slowdown remains a short-lived or sustained phase will be seen in the coming months. The uncertainty surrounding energy supplies in Europe caused by the outbreak of the Ukraine war and the subsequent sharp rise in energy prices has had a significant impact on the energy-intensive chemical industry. This situation has also affected the M&A market in the paints and coatings sector. The North American consulting firm Grace Matthews, which specialises in the field of mergers and acquisitions, sees an increase in activity. Even though 2023 started with only a few transactions, it showed an increase in the second quarter, it said.
Europe no longer main target for buyers
In the recent past, the industry in Europe in particular has been a target for buyers from Asia and Europe. Uncertainty regarding energy supplies in Europe, caused by the outbreak of the Ukraine war and the subsequent sharp rise in energy prices, has had a significant impact on the energy-intensive chemical industry. For this reason, it can be assumed that buyers will act more cautiously when it comes to targets in Europe. At the same time, however, Grace Matthews experts are seeing strong interest from European buyers looking to deploy their capital in other regions, such as North America.