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M&A Attitude Among Japanese Chemical Companies
3:57 AM MDT | August 4, 2009 | By CHRIS CERIMELE
By Chris Cerimele
Together with members of
In general, we found that conditions in
In some cases, the companies we spoke with are benefiting from the government stimulus program in
Regarding M&A appetite, with a few exceptions it was clearly down among the group compared to a year ago. Nearly all of the companies expressed a willingness to consider opportunities on a case-by-case basis, but few at this point are taking a proactive approach to acquisitions. This attitude is driven primarily by the desire to focus on their core businesses in the difficult economic environment, and in some cases the need to preserve cash. If an opportunity arises that is close to an existing core business, is strategic, and is not too large, Japanese companies will give it a full hearing and for the right opportunity they will make the investment. However, few are willing to take a big risk right now.
There are of course, exceptions and we did find a few companies that are performing well in this market, have cash, and view the current situation as a buying opportunity. Moreover, these companies are looking outside their borders and are very willing to look in many different regions of the world. They would even consider larger acquisitions. But they are in the minority.
When will this more conservative attitude make a turn for the better? In general, I think it will take continued stability (or ideally, an increase) in demand over several more months. Some companies will also require strengthened balance sheets. Once this occurs, expect a significant increase in M&A interest from Japanese firms.