December 13, 2018

Chemical Week
Asian M&A in flux
By Vincent Valk

Chemical Week reporter Vincent Valk recently sat down with BDA Partners’ Euan Rellie and Christian Mienert to discuss Asian M&A trends in the chemicals sector. Chemicals M&A in Asia is being impacted by a number of macro and geopolitical forces including the Trump administration’s trade policies, Japanese buyers looking outward, and several countries looking to move downstream. These forces have created an environment where Asian companies are increasingly looking to acquire abroad.

“In the 20th century, Asia developed a manufacturing base,” says Euan Rellie, co-founder and senior managing director at BDA. “Now, ambitions are greater … you have designs far beyond petrochemicals into very, very specialized medical, electronic, automotive, or plastics applications. The theme is wanting to get up the value curve, up the technology curve, into higher profit-margin businesses. We’ve seen lots of different countries in Asia involved with that.”

Additionally, BDA Partners discussed:

The challenges and opportunities for inbound investment in China. Accessing the Chinese market is not cheap – valuations are increasing based on demand and Chinese limits on capital flows.

Chinese buyers looking to new markets in developing countries, particularly around green technology that can address environmental concerns in areas such as plastic recycling, natural fibers, water treatment, waste remediation and nitrogen and sulfur oxide removal technologies.

The impact of trade tensions on US and China M&A, impacting recent financial performances of selected companies, and limiting appetite of Chinese for outbound M&A into US.

Japanese chemical firms becoming more active buyers in the West as Chinese companies have stepped back.

Understanding the nuances of working with Japanese buyers is key: “It takes a while for the Japanese companies to warm up, but once they get into the diligence process they throw a lot of resources and people at these projects,” Rellie says. “Once they get interested, there is a high likelihood of successfully closing a deal.”

Cross-border M&A activity and downstream demand drivers in other key Asia countries including South Korea and Vietnam.

To read the full article please click here: “Asian M&A in flux