The M&A Mirror – Reflecting the State of the Coatings Market

By Cynthia Challener

The coatings industry has faced turbulent times in the last two to three years. Exceedingly high growth preceded drastic drops in demand as the global recession took hold. Fortunately, the improved results in 2010 indicate that some level of recovery is underway. The economic situation remains uncertain, however, and expectations for 2011-while hopeful-are hesitant. Merger and ac­quisition activity in the coating supply chain closely follows the business climate. Analysts believe that many buyers and sellers are anxiously waiting for signs of real recovery that will signal the go-ahead to make more deals.

For the chemical industry in general, there are more companies for sale and 2010 M&A activity is up 45% over the same period in 2009, according to Price Waterhouse Coopers (PWC) in its report “Chemical Compounds: Second Quarter 2010 Global Chemical Industry Mergers and Acquisitions Analysis.” In addition, the value of M&A deals that closed in the first half of 2010 was higher than the value of deals occurring in the same period in 2009.

Furthermore, the data does not reflect the many deals that are currently in progress. Both buyers and sellers are doing more due diligence and being more cautious, and as a result, these transactions are taking longer to close than in the past. With the increased number of deals in the pipeline, though, activity is anticipated by PWC to pick up even further in future quarters.