Chemicals

Bayer can do more to defuse investor rage

1 May 2019

Shareholders cast a vote of disapproval against the German group’s management following cancer-related lawsuits linked to the acquisition of Monsanto. Yet neither side wants a new CEO or strategy. Revamping the board and boss Werner Baumann’s pay might quell the revolt.

Deutsche Bank chair faces shareholder reckoning

29 April 2019

Failed merger talks with Commerzbank are another blot on Paul Achleitner’s seven-year tenure at the German lender. A vote against Bayer bosses suggests investors are becoming more vocal. With his own May 23 judgment day looming, Achleitner has a tough job arguing for continuity.

Bayer shareholder revolt rests on shame factor

25 April 2019

BlackRock and others want to punish the German chemicals group for its takeover of Monsanto, which destroyed $33 bln of value. But the likely vote of disapproval is more bad PR than a binding order. It’s a sign of the limits of shareholder activism in Germany.

Nippon Paint buys pricey pot of Aussie gloss

17 April 2019

The Japanese brand is paying $2.7 bln for DuluxGroup, sending its Australian peer’s shares to record highs. The hefty premium reflects a shortage of targets and the buyer’s eagerness for expansion. Given a cooling economy Down Under, it may have been better to keep the brush dry.

Overpriced Aramco debt still has a Saudi discount

10 April 2019

Strong demand for the oil giant’s first bond allowed it to raise $12 billion at lower rates than expected. Borrowing costs are still higher than Western oil peers. But it makes little sense for investors to view the bonds as less risky than Saudi’s tarnished government.

Roundup crisis could snarl Bayer in activist weeds

29 March 2019

The chemicals maker has lost 40 bln euros in value since U.S. juries said its glyphosate herbicide causes cancer. With science on Bayer’s side, delaying any settlement makes sense. But the longer the German group’s shares remain low, the more vulnerable it looks to interlopers.

Saudi’s $69 bln asset rejig starts banker payback

27 March 2019

Aramco is buying a 70 pct stake in chemical group SABIC from the kingdom’s sovereign wealth fund. The reshuffle is mostly an internal affair but the oil giant will issue bonds to pay for it. That gives banks who have spent years courting the company some return for their efforts.

Legal woes poison Bayer’s prospects

20 March 2019

The German chemical group’s shares fell another 12 pct after a second U.S. jury said its Roundup weed killer causes cancer. Its value is down $34 bln since August and investors reckon its crop sciences unit is worthless. With thousands of cases pending, even that may be generous.

Private equity gives Evonik auto shock absorber

5 March 2019

The German chemicals group has sold its Plexiglas division to Advent International for 3 billion euros. Given it’s a cyclical business exposed to the car sector, that’s a decent price. With its shares flat compared to five years ago, investors may now value Evonik more richly.

Germany’s Merck chips into aggressive M&A game

27 February 2019

The drugs and chemicals supplier is making a hostile $5.2 bln offer for Versum, after Barrick’s $18 bln unsolicited tilt at Newmont. Both aim to nix earlier agreed deals, while Roche is injecting $4.3 bln into new tech. Recent market wobbles have not yet dulled merger mania.

Khashoggi is ghost at Milken’s Abu Dhabi confab

15 February 2019

Financiers at the billionaire’s annual Gulf shindig adopted a Trumpian shrug over Saudi agents’ murder of the dissident journalist. Lucrative forthcoming Aramco deals and White House support for the regime explain why. But the issues raised by Khashoggi’s death still linger.

Farting cows can propel DSM higher

14 February 2019

The Dutch group’s feed supplements reduce bovine flatulence, a big source of methane emissions. That’s not yet on the market, but shows how DSM’s nutrients and chemicals can defy the economic slowdown. A robust balance sheet means it’s financially sustainable, too.

Sinochem’s backtrack sends a fresh IPO warning

31 January 2019

The Chinese chemicals and oil giant has paused plans to float its refining and trading unit in Hong Kong. Beijing’s behemoths once listed regardless of market conditions, thanks to government-backed peers. The $2 bln U-turn should worry hopefuls without state support.

Saudi’s sunny debt offer belies gathering clouds

10 January 2019

Riyadh’s successful $7.5 bln bond sale suggests investors have moved on from the Khashoggi murder. Yet long-dated Saudi debt trades at an implied discount to its rating. With the kingdom too optimistic about oil prices and facing peak demand, markets won’t always be so friendly.

Sika pays up to cement its takeover defences

8 January 2019

The Swiss chemicals firm is paying $2.6 bln for France’s Parex. After a lengthy battle with Saint-Gobain, bulking up to dissuade further approaches makes sense. Relying on revenue synergies to make a decent return on its new deal removes some of the gloss, though.

A cooling China may chill Sinochem Energy’s IPO

16 November 2018

The state giant wants to raise up to $2 bln by listing its trading and refining arm in Hong Kong. It can benefit from lower oil prices. But squeezed margins, volatile markets and jitters over demand at home won’t help. Smart pricing and Beijing’s support will make the difference.

DowDuPont needs its breakup more than ever

31 October 2018

Recession fears and a writedown have burned off a quarter of the chemical giant’s value. It’s too strong a reaction: its businesses won’t suffer equally in a downturn. Dow’s worth some $175 bln, 40 pct above its current value. Next year’s three-way split should crystallize that.

Smiths wobble fortifies case for more surgery

21 September 2018

The $8 bln engineer reported its first sales growth in five years, but the shares fell due to a weaker-than-expected outlook. After rejecting a sale of its medical unit, CEO Andy Reynolds is pruning assets and investing. That may not be enough to close a steep valuation discount.

Saudi-Clariant chemical deal is murky concoction

18 September 2018

The Swiss group is setting up a joint venture with 25 pct shareholder Saudi Basic Industries. At the same time SABIC will contribute a new Clariant CEO and four board directors. Though the venture should make sense, the company’s governance becomes more complicated.

Chinese mega-merger should catalyze chemical M&A

1 August 2018

A changing of the guard at ChemChina suggests a Sinochem deal is getting closer. At more than $100 bln in annual revenue, the resulting giant would be on par with DowDuPont. Some forced sales may result, but Beijing's ambition will keep the focus squarely on more buying.