Markets & Companies

2017 Through the Rear-view Mirror

Part 1: The Rocky Road to Mega-mergers

08.01.2018 -

Mergers and acquisitions, new petrochemical projects, the dismantling of US environmental regulations, and a tussle over the hazards of pesticides in Europe, along with a protracted discussion over life after Brexit and a few changes in corporate top management echelons – these were all topics that occupied the attention of the international chemicals and pharmaceutical industry in 2017. By any count, the series of mega-mergers dominated the headlines, but there were also many smaller deals.

By anyone’s yardstick, the past two years have been among the most exciting of the new millennium for the global chemicals sector, and all of them were in the spotlight in one way or another last year. Reason enough for us to look back. Dede Williams and Elaine Burridge wrote this CHEManager-exclusive 9-part review.

The Rocky Road to Mega-mergers

The biggest M&A deals were announced for the most part during 2016. By the end of 2017, two had been completed, the $130 billion mega merger between US chemical giants Dow Chemical and DuPont and the takeover of Swiss agrochemicals major Syngenta by ChemChina.

Still pending as 2018 began were the fusion of German and US industrial gases producers Linde and Praxair and – the “mother of them all” – the marriage of Bayer and Monsanto. In January, the latter, without doubt the most controversial, seemed to still hover on the far horizon.

Two widely anticipated deals that did not materialize last year were the merger of Clariant and Huntsman and the unfriendly takeover of AkzoNobel by PPG.


Following a protracted in-depth probe into the multi-million-dollar transaction, in which it closely scrutinized in particular positions in the agrochemicals sector, the European Commission approved the proposed merger of Dow Chemical and DuPont into DowDuPont at the end of March 2017. Other regulatory authorities quickly followed suit, and the link-up was officially forged in August.

 In exchange for authorities giving the green light, the two chemical giants agreed to sell substantial assets including key research and development activities related in particular to EU operations. The merger partners also had to grapple with last-minute changes desired by their activist shareholders – who had been the driving force behind the merger plans. These included mostly internal realignments, with a shareholder-broached split into six rather than three entities apparently off the table.


At the beginning of April 2017, the US Federal Trade Commission, followed by the European Commission, greenlighted ChemChina’s $43 billion acquisition of Switzerland’s Syngenta, and China's Ministry of Commerce did so shortly afterward. This deal was the largest-ever cross-border acquisition for the People’s Republic.

As a condition for US approval, the Chinese group agreed to divest several products made by its Israel-based agrochemicals subsidiary Adama, which triggered several knock-on sales. In exchange for EU approval, it pledged to sell "a significant part" of its Adama unit’s crop protection business. Syngenta also agreed to divest some of its own crop protectants that it said were not material to its business.

EU Competition Commissioner Margrethe Vestager said the “significant remedies” offered by ChemChina “fully address our competition concerns.”  Syngenta CEO Erik Fyrwald stressed that the Swiss company will remain independent, despite being Chinese-owned.


 The road to the proposed €60 billion merger between industrial gases heavyweights Linde of Germany and Praxair of the US was as rocky as any and rockier than perhaps the other cross-continent deal between Switzerland and China. This was due more to internal misgivings than anti-trust issues.

While the arrangement called for the new company to bear the Linde name, plans to manage the company from the US while headquartering it in the UK did not sit well with the shareholders and employees of the German group. Contrary to current Linde CEO Aldo Belloni’s suggestion that the transaction could be finalized in late April 2017, it was still not a done deal at the beginning of 2018, despite the fact both boards had approved.

Linde’s shareholders thought the tender price too low, and employee representatives – who earlier had sought to torpedo the deal – remained skeptical that they would get a fair shake under the company’s future US management.  At the end of November, Linde reported that 92% of all its shareholders had tendered, after the offer was extended and the acceptance threshold lowered.  The last word from Germany in late 2017 was that closure is expected in the first half of 2018.


After sweetening its offer to $128 per share, Bayer in mid-2016 finally overcame Monsanto’s resistance to the deal it had proposed earlier in the year and announced that it would go ahead. During 2017, the $66 billion merger jumped through many hoops and took several hurdles, but completion was still on the far horizon as the new year started.

The EU especially remains concerned that the come-together, which would create the world's largest integrated pesticides and seeds company, could reduce competition in a number of different markets. Although the parties did not confirmed the figure, reports in autumn 2017 said the industry mammoths were prepared to divest assets worth $2.5 billion in return for regulatory approval. This was nearly a billion more than the maximum targeted a year earlier.

For the all-important agrochemicals sector, one of the most significant knock-on effects was the sale of an agrochemicals and seeds package to BASF for €5.9 billion. This will give Bayer’s German rival – world’s largest chemical producer in terms of sales – an entry into the seed treatment business. The assets, which include the global glufosinate-ammonium non-selective herbicide business sold under the Liberty trademark, as well as Bayer’s seed treatments for key row crops, had sales of roughly €1.3 billion in 2016.

Possibly the most excitement in the past year was generated by the deals that didn’t happen.


After it emerged in March 2017 that US coatings maker PPG had made an offer to take over Dutch rival AkzoNobel, the suitor from across the pond revealed in June that it had decided to walk away from the plan. In comparison to the other proposed – and concluded – mergers, the struggle lasted only three months, but to both participants and observers it seemed like an eternity.

While the US withdrawal left the Dutch coatings producer independent, Akzo did not emerge from the fight unscathed. In the process, the Amsterdam-based company lost its CEO as well as its CFO, and its supervisory board chairman announced his impending retirement. On the – very prominent – sidelines, Akzo became embroiled in a secondary battle with an activist shareholder. To save what could be saved in case the takeover was successful takeover, the coatings specialist brought forward a plan to spin off its chemicals business, worth €4.8bn in annual revenue.


In a move that surprised some but others had anticipated, the $20 billion transatlantic fusion of Swiss and US specialty chemicals producers Clariant and Huntsman was called off in late November 2017 – five months after it was announced and shortly before it was due to be approved by shareholders.

This deal ran aground on the opposition of an activist investor – five months after it was announced. Targeted closing date was the end of 2017. Few had believed this timetable was realistic, in view of regulatory hurdles but more importantly the opposition of Clariant’s major shareholder, the hedge fund acquisition vehicle White Tale. As the investor announced it had increased its stake, it seemed doubtful that the Swiss company could garner enough votes to allow the merger to go ahead.

The multi-billion all-stock transactions, which was marketed as a “merger of equals,” would have seen Clariant investors controlling 52% of the combined entity with sales of $13.2 billion and Huntsman shareholders owning the remainder. Both boards of directors had already approved the deal.

If you interested in the other parts of our series "2017 Through the Rear-view Mirror" click on the following links: