To say that the state of merger and acquisition (M&A) activity in the adhesives and sealants industry is “strong” or “robust” would be misleading. In actuality, the M&A markets may have never been stronger. Among adhesive and sealant formulators, we counted 29 deals in 2014 and 37 in 2015; with 21 so far this year (through June), it appears that 2016 may be on track to be a record year. More than half of the companies in the ASI Top 25 (see p. 14) completed transactions in 2015, with several (e.g., Sika, RPM, H.B. Fuller and Royal Adhesives) making multiple acquisitions.
This level of activity should not be surprising; the economic backdrop is nearly ideal. Corporate balance sheets are strong, private equity groups are flush with cash, and relatively inexpensive credit is accessible. Important end markets for adhesives also appear to be recovering faster than other sectors of the economy. A few large deals have taken place in the past few years, including Arkema’s purchase of Bostik for nearly $2 billion and Solvay’s acquisition of Cytec for more than
$6 billion. Large transactions such as these tend to generate additional M&A activity, either in the form of corporate carve-outs or as other industry participants ramp their own M&A programs to remain competitive.