Chemical Makers' M&A Rebound Is Dogged by High Valuations, UniCredit Says

A rebound in mergers and acquisitions in the chemical industry is being slowed by the high price tags placed on assets by sellers, according to UniCredit analyst Andreas Heine.

BASF SE’s purchase of Cognis Holding GmbH for $3.9 billion and Bain Capital LLC’s $1.63 billion takeover of Dow Chemical Co.’s styrene unit mark a pick-up in activity this year, yet pricing remains a constraint on deal-making, Heine said.

“The crisis was hefty, but short -- too short for prices to come down,” Heine said in a phone interview. “There has been no bargain hunting.”

Among the chemical companies that may be poised to pounce on available assets is Belgian plastics maker Solvay SA, which may use its 6.5 billion-euro ($8.2 billion) war chest to target flavors and fragrances maker Symrise AG, Heine said. After buying Dow Chemical in March, Bain may buy BASF’s styrene business to consolidate assets if antitrust rules permit, according to UniCredit.

Dutch paint maker Akzo Nobel NV is the most likely suitor for Australia’s DuluxGroup Ltd., Heine said. Shareholders of parent company Orica Ltd. approved the de-merger of the business today. Royal DSM NV can finance acquisitions of as much as 3 billion euros, Heine and colleagues said in a note to clients.

Synthetic rubber maker Lanxess AG could be interested in Eliokem SAS, and may dispose of businesses including functional chemicals and rubber chemicals, UniCredit wrote.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net.

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