U.S. subprime crisis will hit the global pharmaceutical and chemical? – Subordin
2007, the global chemical industry M & A transactions to break the 2006 record of 42,000,000,000 U.S. dollars, 550 billion, the global chemical industry completed value of more than 25,000,000 U.S. dollars in M & A transactions in 81. Chemical industry M & A transactions in 2008 the situation then? As the U.S. subprime crisis is spreading the negative effects of the financial market is becoming increasingly difficult to finance, globalization, mergers and acquisitions affected industries show the new features of the global pharmaceutical and chemical industry, which in turn affect … …
U.S. subprime crisis affecting the global pharmaceutical and chemical
Credit crisis is dragging the U.S. economy the edge of recession, no hope of getting the bond market, the general global economic slowdown fears spread, so even though a number of potential factors to promote the activities continue, the global market growth rate in 2008 will slowdown. The global chemical industry consulting firm PricewaterhouseCoopers, said service director SaverioFato: U.S. credit markets and money market's macro environment may continue to affect the global chemical industry M & A activities, in 2008 the global chemical industry M & A activity is difficult to maintain the 2007 the level, it is expected that an active secondary market transactions. Strategic investors, especially foreign interest in U.S. assets, strategic buyers, still waiting in the wings. Investment bank Yong & Partner's president PelerYoung that the credit crisis or recession will affect the 2008 Global M & A market growth rate, financial buyers will converge action.
New York-based investment bank Oppenheimer & Co Managing Director Ministry of Chemical Industry TimWilding said that as the debt financing markets are tight, and tens of billions of dollars in chemical enterprise property rights is almost impossible. However, he still trading in 2008 the chemical industry optimism. In 2007, private equity firms completed M & A transactions account for 22% of the total transactions, total transaction volume (in dollars) of 17%. In 2008, the private equity financing because of the difficulty of global chemical M & A market will be elegant demeanor.
New York-based commercial bank ValenceGroup Senior Managing Director TellyZachariades that in the foreseeable future, as many investment banks in the U.S. subprime crisis, before the combined effect of not fully understand the reluctance to make major financial decisions, so private equity firms, trading volume more than three billion to 50 billion U.S. dollars, and even in some environments as low as 10 billion dollars in M & A activities are difficult to complete.
Market need for new financing channels
Since July 2007 the United States credit crisis, the chemical industry has been the lack of high-yield bond sale. Last year in August, Saudi Arabia, Saudi Basic Industries Corporation (SABIC) issued 77 billion of senior secured debt payments and 15 billion dollars in senior debt for its acquisition of GE Plastics (GEPlastic) 11.6 billion needed to finance. However, the financing model can be a special case, because the banks eager to Saudi Basic Industries Corporation and the Government of Saudi Arabia to do business.
After that, the American industrialist LenBlavatnik of AccessIndustries Holdings interim financing in the market to raise eight billion U.S. dollars in funding and in December 2007 acquisition of the United States, Lyondell Chemical Company. AccessIndustries3 month from long-term bonds issued, which in the current capital market environment, but not a small task. This interim payment began on Dec. 20, 2007, the London interbank offered rate (LIBOR)-based, plus the profit margins are not clear. But after the initial 6 months, profit margins will increase by 0.5 percentage points, and will continue every 3 months of 0.5%.
U.S. multinational chemical group Solutia Inc. (Solutia) is being sued Citibank (Citigroup), Goldman Sachs Group (GoldmanSachs) and Deutsche Bank (DeutscheBank), as it announced its withdrawal from three banks for financing two billion U.S. dollars, while the financing is the first Solutia key steps to avoid insolvency.
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