Updating the M&A scenario in the chemicals space, Bernstein said in a note on Monday that there are currently six M&A live deals in its covered chemicals space, now that the PPG Industries, Inc PPG–Akzo Nobel N.V. (ADR) AKZOY deal has been called off.
Analysts Jeremy Redenius, Jonas Oxgaard, Aaron Gal and Gunther Zechmann gave details on where each of the deal stands now.
Markets Fully Expect The Dow/DuPont Deal To Close
The analysts expect the E I Du Pont De Nemours And Co DD–Dow Chemical Co DOW deal to close, with the probability of closing at 95 percent and the likely timeframe by August.
The analysts do not think the FMC Corp FMC–Dupont deal, pending before the European Union, to impede the Dow/DuPont deal. The analysts believe that the market has fully digested a deal closure and was currently focusing on synergies of the deal.
ChemChina/Syngenta Deal In Very Final Stage
Bernstein said the ChemChina is now at the very final stage of its acquisition of Syngenta AG (ADR) SYT, having completed the second settlement of the tender offers on June 7 and acquired 94.7 percent of Syngenta shares in aggregate. The firm noted that ChemChina intends to de-list the shares of Syngenta, subject to applicable regulation.
Bayer/Monsanto Deal Closing Probability At 75%
The firm maintains its probability estimate for the closure of the Bayer AG (ADR) BAYRY–Monsanto Company MON deal at 75 percent. The firm noted that the companies were in Phase 2 in the U.S. and are looking to do the required divestitures, while a European filing is expected in the second quarter.
While the companies expect the deal to close in late 2017, the firm thinks the deal could slip into 2018.
Potash Corp–Agrium Deal To Close Without Major Hurdles
Bernstein puts the probability number for the Potash Corporation of Saskatchewan (USA) POT–Agrium Inc. (USA) AGU deal closure at 90 percent. The firm expects the deal to result in a high market share concentration in North American nitrogen and potash.
However, the firm thinks the FTC will deem nitrogen and potash as global commodities as it did with phosphate in Mosaic Co MOS's purchase of CF Industries Holdings, Inc. CF's phosphate assets. Meanwhile, the firm expects the deal closure to slip beyond the company's target of a third-quarter close.
Anti-Trust And Integration Challenges For Praxair-Linde Deal
Bernstein expressed worries about anti-trust and integration challenges over the LINDE AG SPON ADR EA REPR 0.10 ORD LNEGY–Praxair, Inc. PX deal, with the probability of closure at 75 percent.
That said, the firm has now become more positive about Praxair management's ability to improve the operating performance of both companies.
Akzo Management Under Great Pressure
Bernstein thinks Akzo management is now under pressure to reconcile with frustrated shareholders, as PPG walks away from the deal. The firm is of the view that Akzo has to work harder now to deliver its 2020 targets and separate SC in the next 12 months, with the risk of selling it at a distressed price.
Limited Strategic Rationale In Clariant-Huntsman Deal
Bernstein sees limited strategic rationale in the Huntsman Corporation HUN–CLARIANT AG ADR EACH REPR 1 COM CLZNY deal, which has limited stock performances of both companies. However, the firm thinks the deal is likely to be approved by anti-trust authorities and shareholders before the year-end, with the probability of approval at 80 percent.
"The deal makes financial sense but investors need to be willing to discount 2019+ earnings, a timeframe which we think markets are unlikely to discount at this stage," the firm added.Related Links: Dow Chemical CEO Talks 4% GDP Growth Under Trump's Presidency Goldman Reviews Bayer-Monsanto Deal
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