STUDY: M&A strategies for the chemical industry | Page 2

Strategic Focus on M & A Strategies Increases Shareholder Returns

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EXECUTIVE SUMMARY
STUDY FRAMEWORK

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M & A IN NEW STRATEGIC AREAS SHOW HIGHEST SHAREHOLDER RETURNS
Companies focusing on M & A in new strategic areas ( TSR : ~ 19 %) reached highest average annual TSR as compared to companies focusing on portfolio enhancing ( TSR : ~ 16 %), core ( TSR : ~ 7 %), and divestment ( TSR ~ 1 %) M & A .
FREQUENT M & A ACTIVITY SUPPORTS HIGHER SHAREHOLDER RETURNS
Companies with high deal frequency achieved significantly higher average annual TSR ( TSR : ~ 16 %) compared to companies with low deal frequency (< 2 / year ) ( TSR : ~ 4 %). This also includes the power of value unlocking , sub-segment , and other divestments .

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STRING OF PEARLS APPROACH INCREASES VALUE OF M & A ACTIVITIES
Competitors pursuing a string of pearls ( high frequency / low volume ) approach show the highest average annual TSR ( TSR : ~ 19 %), followed by largescale ( TSR : ~ 13 %), selective ( TSR : ~ 8 %), and all in ( TSR : ~ 1 %) M & A .
We have analyzed M & A strategies and Total Shareholder Return ( TSR ) of a representative group of 16 companies from the Specialty Chemicals sector with :
• a cumulated revenue of more than EUR 200bn and market capitalization of more than EUR 300bn
• considering close to 300 [ 1 ] deals in the period between 2015-2020 with a consolidated deal value of EUR 164bn [ 2 ]
High frequency / low volume transaction focus :
The “ String of pearls ” approach boosts Total Shareholder Return AUTHORS : Gerrit Schütte , Managing Director Stephan Dellermann , Principal
[ 1 ] Excluding transactions not related to core business ( chemicals-related ); [ 2 ] only considering deals with available transaction value Source : goetzpartners
The authors thank Tanja Bersuch , Yannik Haas , Julia Fiedler , Vincent Verweyen for their contribution to this publication .