InSight

Exit and Growth Strategies for Middle Market Businesses

M&A News From the Industrials Industry

By John Hammett | Nov 22, 2016

Industrials IndustryM&A activity for North American based target companies in the industrials industry for Q3 2016 included 235 closed deals, according to data published by industry data tracker FactSet. The average transaction value was $231 million.

On the public markets the industrials industry sector had an up-and-down quarter affected by shifting commodity prices, but ended strongly heading into Q4. Both presidential candidates have promised to make significant investments in infrastructure if elected, which should positively affect industrials stock moving forward.

Mergers in the highly concentrated industrial gas sector could trigger more asset sales as the largest suppliers look to clear antitrust hurdles. Germany-based Linde recently entered preliminary talks to merge with US-based Praxair, a combination that would make Linde/Praxair the leading global industrial gas supplier, according to The Wall Street Journal. That designation currently belongs to France-based Air Liquide, which grabbed the top spot in May 2016 when its $13.4 billion acquisition of US-based Airgas closed. Like Air Liquide and Airgas, Linde and Praxair will face intense antitrust scrutiny if the transaction proceeds and regulators could force the companies to divest certain production units. The Federal Trade Commission required Air Liquide and Airgas to sell off assets with revenues of $270 million before greenlighting their merger. Air Liquide agreed to sell 18 air separation plants, two nitrous oxide plants, four liquid carbon dioxide facilities, and three welding gas retail stores to New Jersey-based Matheson Tri-Gas (a subsidiary of Japan’s Taiyo Nippon Sanso) in June 2016.

Industry Indicators

  • US nondurable goods manufacturers’ shipments of chemical products, an indicator of industrial chemicals production, rose 2.3% year-to-date in August 2016 compared to the same period in 2015.
  • The spot price of crude oil, a key ingredient in industrial chemical manufacturing, rose 10.0% in the week ending October 7, 2016, compared to the same week in 2015.

Posted by John Hammett.

Read the Entire Industrials M&A 4th Quarter Newsletter Here


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