IHS Chemical Week


Chemical Finance Digest, May 16-20

11:41 AM MDT | May 23, 2011 | By VINCENT VALK

Topping the headlines last week, Danisco has accepted DuPont's revised $6.4 billion offer, and DuPont is reorganizing in light of the deal.

In other M&A news, Lindsay Goldberg, a private equity firm, is buying a 49% stake in three Odfjell tank terminals in Rotterdam and Houston. Meanwhile, Altana has agreed to buy Color Chemie Group, a specialty printing inks manufacturer. Overall, chemicals M&A had a healthy first-quarter, according to a new report by PriceWaterhouseCoopers.

In debt and equity, algae oils firm Solazyme is filing for a $184 million IPO. Meanwhile, Moody's assigned a 'Baa3' rating to Invista's $600 million asset-backed credit line. The investment-grade rating reflects the agency's faith in Invista parent Koch Industries' debt reduction efforts. Arch Chemicals has also refinanced its credit line.

A couple of major macroeconomic indicators were released last week. Housing starts fell to a 523,000 annual rate, below estimates, while April's industrial production numbers were flat. The latter was hurt by a double-digit decline in motor vehicle production rates, which offset gains in other areas. Weak prices continue to dampen the housing market, IHS Global Insight says.

In other headlines, Tata Chemicals and Borealis reported rises in profits.

I attended Houlihan Lokey's Global Industrials Conference, where executives were focused on growth, but, skeptic that I am, I couldn't help but wonder if their optimism is misplaced. Panelists at a discussion on industrials M&A were all surprised at the strong bounce-back in the market, but some wondered if any lessons have been learned from the downturn. With cheap credit and strategic buyers flush with cash, I'm bullish on M&A, but all of this does have the makings of another bubble – a frightening prospect in the long-term, when you think about it.

Back on the short-term, the week ahead will see first-quarter U.S. GDP figures released on Thursday. Consensus is for quarterly growth of a bit over 2%.

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