KPMG, the Netherlands-headquartered consultants, says there will potentially be acquisitions of about $100bn in the petrochemicals sector over the next two years, as Middle Eastern and Asian companies compete for assets in Europe, the US, and Japan.
The push to acquire new assets will be driven by the desire to get access to technology and profit from growing demand for petrochemcials products.
“With demand for downstream chemical products set to increase over the next three years, the major players in the Middle East and Asia are attempting to supplement their focus on asset-intensive commodity chemicals production with more labour-intensive specialty chemicals to capture this demand,” says Chris Stirling, European head of chemicals and pharmaceuticals at KPMG.
Stirling says the regulatory environment might benefit Middle Eastern players over Asian counterparts. “It could be argued that the likes of Saudi Arabia and other Middle Eastern players are able to move more quickly to get deals over the line than their counterparts in the Far East, who may have to jump through far more regulatory hoops in their own jurisdictions,” says Stirling.
The anticipated rise of merger and acquisitions (M&A) activity in the petrochemicals sector is at odds with the general trend in the M&A market, where the return of volatility has reduced appetite to do deals.