For the majority of industries, 2016 is turning into a bust when it comes to M&A activity. However, the chemicals sector is singing a different tune and is actually experiencing a boon. In general, deal volume and value are down year over year. From January through April 2016, $175.8 billion was transacted in 1,003 deals globally, versus $294.3 billion and 1,473 deals during the same period the prior year. When evaluating the broader picture, it’s no surprise there is a global slowdown in transactions. Companies are operating in a global landscape where the Eurozone remains unstable, Chinese markets are a cause for concern, and U.S. equity markets have been on a rollercoaster ride since the beginning of the year.
The chemicals sector outlook is different. With a series of pending megamergers, such as Dow Chemical Co.’s acquisition of DuPont ($130 billion), ChemChina’s takeover of Syngenta ($43 billion), and Bayer’s recent offer for Monsanto Co. ($62 billion), the sector will likely produce some of the largest deals of the year. In fact, the Dow-DuPont transaction will set records with respect to its size. But that’s not all: Robust activity at the top is spurring activity downstream, opening the spigot for additional transactions to flow.