Chemicals

U.S. companies off-key singing strong-dollar blues

27 Jan 2016

Apple, DuPont, J&J and P&G blame the greenback’s rising value for lowering quarterly sales. They have a point, but a robust currency helps consumers, importers, service providers, real-estate sellers and others. That’s reason enough for Americans to whistle while they work.

Time for BASF to press the self-help button

27 Jan 2016

The low oil price is hitting the German chemicals giant harder than previously expected, with writedowns denting 2015 operating profit by 18 pct. Investors won’t be best pleased. But BASF has a big oil and gas investment budget it can hack back before considering deeper cuts.

Dow-DuPont tax acrobatics more clever than cagey

15 Dec 2015

The chemical giants’ $130 bln merger and split should avoid any tax on capital gains. One needed contortion is to show that the shareholder rosters overlap. Dodges like so-called inversions have caught flak lately, but this looks more like a convenient fit with byzantine rules.

DowDuPont tests limits of ambitious M&A

11 Dec 2015

A $130 bln union of the U.S. chemical titans is really four deals in one, given a planned three-way breakup to follow. The $30 bln of estimated value creation from cost savings is aggressive. Mergers of equals often become strained. At least the strategic rationale makes sense.

Goldman and Morgan Stanley cement M&A oligopoly

11 Dec 2015

Both banks landed advisory roles on either side of the $130 bln DowDuPont merger, extending their league-table leads in a record year of dealmaking. They also held the one and two spots during the 2007 and 2000 peaks. Cracking the top tier can be done, but it’s exceedingly rare.

Dow-DuPont reaction could produce $20 bln in value

9 Dec 2015

Combining the chemical giants, each worth nearly $60 bln on Tuesday, would be complicated. A three-way split thereafter might not unlock much value, but would bring focus. Asset rejiggering could allow cost cuts worth almost twice as much as Wednesday’s 10 pct share-price gains.

Dow-DuPont an activist coup on Corporate America

9 Dec 2015

The $60 bln chemical giants are in merger talks, according to reports, a testament to the persistence of pushy investors Dan Loeb and Nelson Peltz. If the companies pull off a deal and a rumored three-way split, it could be this generation’s version of barbarians at the gate.

Airgas schools market on long-term greedy

17 Nov 2015

Shareholders will receive $10.3 bln in cash selling to Air Liquide. That’s a 51 pct premium, which also means Airgas has outperformed rivals and the S&P 500 since early 2010 despite being the target of an unsuccessful hostile bid. Successive CEOs played their hand well.

BASF can withstand pain from cheap oil and China

27 Oct 2015

The German chemical giant has been hit by deteriorating emerging markets. Low oil prices also hurt BASF’s exploration business. A slightly poorer 2015 guidance sent shares down more than 3 pct. But a solid balance sheet and strong cashflow justify the group’s $77 bln valuation. 

Syngenta CEO exit opens door to opportunists

21 Oct 2015

Mike Mack will leave the $30 bln Swiss agrochemical company. Shareholders grumbled that the company fumbled a bid from Monsanto. New leadership may be more credible than Mack in cutting costs. Meanwhile, Syngenta looks more open to a bid or a breakup.

Monsanto plants seeds for weathering rough times

7 Oct 2015

Weak grain prices and forex swings battered the crop giant’s earnings, bringing a lower 2016 forecast just weeks after its Syngenta bid collapsed. The whole sector is down, though, and a faster stock buyback and $300 mln of cost cuts will help the company through a lean period.

DuPont succumbs to activist in absentia

5 Oct 2015

Ellen Kullman is retiring as chair and CEO of the $45 bln chemical giant, five months after fending off a pushy Nelson Peltz. Another profit warning and an interim boss who’s a restructuring guru suggest an abrupt transition. DuPont may have to give a breakup another hearing.

Bayer $11 bln plastic IPO looks far from fantastic

21 Sep 2015

The German pharma giant is floating its Covestro division. The unit is cash-generative and well positioned for growth. But it is also a capital-hungry and cyclical business that has destroyed value for years. Bayer might need to be more flexible on the float price.  

Monsanto leaves Syngenta facing awkward questions

26 Aug 2015

The world’s largest seed maker has given up pursuit of its Swiss rival. The $46 bln deal required aggressive assumptions and carried risks. Syngenta’s management now needs to prove its reluctance to talk was worth it. 

Monsanto $46 bln Syngenta offer deserves a hearing

26 Aug 2015

The U.S. seed giant’s last cash and shares approach to its Swiss rival was rebuffed. Monsanto has offered a little more, but can’t go much higher without destroying value or relying on rosy assumptions. The pressure is on Syngenta to talk, or show investors it has a better plan.

DuPont’s fight against Nelson Peltz rages on

28 Jul 2015

The $50 bln chemical maker may have seen off the pushy billionaire in May, but its shares have since tumbled 20 pct. DuPont now expects lower profit, and dividends from spun off Chemours look shaky. Boss Ellen Kullman soon could find shareholders wondering what might have been.

Fertilizer deal talks emit whiff of exuberance

20 Jul 2015

U.S. nitrogen giant CF Industries is sizing up $6 bln Dutch rival OCI. A combination could bring tax and other savings. CF got the timing right when it bought rival Terra in 2010. This time, prices are falling and new supplies arriving. The M&A enthusiasm looks excessive.

Apollo strains to heed LBO mission control

2 Jun 2015

Leon Black’s private equity shop is paying a headline valuation of 9.4 times EBITDA for specialty chemicals maker OM Group. Side deals will lower the multiple but Apollo’s avowed discipline looks tough in a pricey market. It’s a small buyout that illustrates a bigger industry problem.

DuPont shows three ways to neuter activists

13 May 2015

The chemical conglomerate has defeated Nelson Peltz’s push for four board seats. Decent company performance was DuPont’s sharpest knife. Unveiling a credible financial plan, including the cost of the breakup Peltz once wanted, and appointing respected directors finished the job.

Monsanto heaps pressure on Syngenta

8 May 2015

The U.S. seeds giant has made a $45 bln approach to the Swiss pesticide firm. The target rejected this as too cheap and too risky. Syngenta has a point: there will be major political and antitrust hurdles. But it needs to lay out just how it will create more value on its own.