DEALTALK-U.S. chemicals sector likely to see new wave of deals

Tag : Chemicals

NEW YORK, July 15 (Reuters) - The U.S. chemical sector is likely tosee a new wave of deals in coming months, driven by strategicbuyers looking to build a more profitable and streamlined portfolioof assets.
Moreover, valuations in the chemical sector have undergone a sharpcorrection since the heady highs of last summer, when a spate ofprivate equity buyouts buoyed the share prices of U.S. chemicalmakers.
"Are we going to see more deals -- no doubt," said Morningstaranalyst Ben Johnson. "But, I think deals the size of what we sawbetween Ashland-Hercules are more likely than another Dow-Rohm andHaas type deal."
Dow Chemical (DOW.N: Quote , Profile , Research , Stock Buzz ), the largest U.S. chemical maker, on Thursday agreed to acquirespecialty chemical maker Rohm and Haas (ROH.N: Quote , Profile , Research , Stock Buzz ) for $15.3 billion, narrowly nudging past a bid from Germany'sBASF (BASF.DE: Quote , Profile , Research , Stock Buzz ).
In a similar move, chemicals and Valvoline motor oil maker AshlandInc (ASH.N: Quote , Profile , Research , Stock Buzz ) on Friday said it would acquire its peer Hercules Inc in a $2.6billion cash-and-stock deal.
HSBC analyst Hassan Ahmed noted that companies looking toconsolidate are more likely to target U.S. specialty chemicalcompanies over their European counterparts.
"It makes more sense and you have cleaner specialty assets in NorthAmerica," said Ahmed, noting that European specialty companies wereburdened by some unattractive assets in their portfolios.