M&A strategies for specialty-chemical corporates - Page 2

A strategic focus on M & A activities increases shareholder returns

EXECUTIVE SUMMARY STUDY FRAMEWORK

01

02

SMALL-VOLUME M & A DEALS SUPPORT HIGHER SHAREHOLDER RETURNS
Corporates focusing on low deal volumes achieved significantly higher average annual TSR ( TSR : about 14 %) compared with corporates focusing on a high deal volume ( more than € 200M ) ( TSR : about 6 %). This also includes the power of value-unlocking , subsegment , and other divestments .
SPECIALTY-CHEMICAL CORPORATES SHOW GREATEST SHARE OF DIVESTMENTS TO PES
In terms of M & A dynamics , specialty-chemical corporates divested their assets more often to private equity ( 54 %) and to other corporates ( 51 %) compared with investments in the respective groups .

03

04

M & As IN NEW STRATEGIC AREAS SHOW HIGHEST SHAREHOLDER RETURNS
Corporates focusing on M & As in new strategic areas ( TSR : about 17 %) reached the highest average annual TSR compared with corporates focusing on portfolioenhancing M & As ( TSR : about 16 %) and divestment M & As ( TSR about 2 %).
STRING OF PEARLS APPROACH INCREASES VALUE OF M & A ACTIVITIES
Competitors pursuing a string of pearls ( high frequency and low volume ) approach show the highest average annual TSR ( TSR : about 16 %), followed by selective M & As ( TSR : about 11 %), all-in M & As ( TSR : about 8 %), and large-scale M & As ( TSR : about 5 %).
We analyzed the M & A strategies and total shareholder return ( TSR ) of a representative group of 16 corporates from the specialty-chemicals sector with :
• a cumulated revenue of more than € 190B and market capitalization of more than € 320B .
Our analysis considered :
• close to 300 1 deals in the period between 2015 and 2021 that had a consolidated deal value of € 162B . 2
“ Frequent small-volume M & A deals are pushing total shareholder return .”
AUTHORS : Gerrit Schütte , Managing Director Stephan Dellermann , Partner
The authors would like to thank Gabriel Berenstein , Tanja Bersuch , Linh Dong , Annika Ehlert , Julia Fiedler , and Yannik Haas for their contribution to this publication .
[ 1 ] Excluding transactions not related to core business ( chemicals related ) [ 2 ] Only deals with an available transaction value were considered
2