Eat or be eaten

Worldwide in the chemicals industry, there appears to be a hunger for acquisitions and consolidation.  Industry experts say they expect this “eat or be eaten” trend to continue, as chemical firms seek higher margins and diversity in markets.  Two examples of this trend are the Solvay buy-out of the French group Rhodia in April for US$30 billion and DuPont’s bid for Denmark’s Danisco.  The trend is towards higher margins and higher growth areas and away from base chemicals.  One banker said, “Corporates are sitting on a lot of cash, credit markets are open and there is pent-up demand for M&A activity.” The focus is especially on specialty chemical companies and the performance materials field where targets could be Croda, Arkema, Lanxess or Altana.  In the U.S., Chemtura and FMC Corp.have been pointed out as potential targets.  The end game for a company in the chemicals industry is either to grow a company geographically or add new types of products or markets. (May 2, 2011)