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Districonsult report a slow down in M&A activity involving distributors

June 11, 2008

According to the findings of a report by Districonsult, the first half of 2008 saw a marked drop in M&A activities in the chemical distribution sector. In total, only 12 acquisitions were completed in the first half of 2008, one in South Africa, two in USA and nine in Europe. Districonsult reported over 30 M&A transactions in 2007.

The two most significant features according to Districonsult, were the small number of deals and the much smaller transactional amounts with only two deals above €100 Millions, namely Atrium/Unipex bought by AXA Equity and Druckchemie bought as a secondary purchase by 3i who bought them from SG Capital Europe. SG Capital Europe sold them to 3i only two years after having acquired them. Other transactions were small in the overall range between €10 and 20 Millions.

The chemical distribution consolidation trends observed from 2002 to 2007, particularly in Europe, appeared to have slowed down very significantly Districonsult believe.

Several factors explain the M&A deceleration, namely the credit crunch, declining economic prospects in Europe and North America, vanishing securitized loans, reluctance of some sellers to accept much lower multiples and the high indebtedness levels of some of the bigger deal makers of the recent past.

Source: Districonsult website

Further Information

Visit: http://www.districonsult.com

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