chemicals executive m&a report 2015 - 2
TRANSCRIPT
The rise of activist investors in chemicals
Activist investors are making an impact on all industriesNumber of activists in all industries; strategies employed
Sources: Activist Investor; A.T. Kearney analysis
21%
13%
11%5%3%
47%Boardchanges
2010 2012 201420132011
203
160150
8976
2.5x
Balance sheet
Other governance Remuneration
Business
Portfolio restructuring
Shareholder Target Stake1 Activist agenda
Third Point(Daniel Loeb)
Dow ChemicalRoyal DSMFMC Corp.
5.2%3%1.2%
Notable activist investors arebreaking up chemicals majors
1 Ownership stake as of December 31, 2014Sources: Activist Insight, ICIS, IHS Chemical Week, Moody's, chemistryworld; A.T. Kearney analysis
• Split petrochemical or specialty business and increase segment reporting transparency• Sell or spin o� lower-performing units
Trian(Nelson Peltz)
DuPont 2.3% • Spin o� performance chemicals division and split remainder into a performance materials and an agro science division
• Reduction of holding company costs
Pershing Square(Bill Ackmann)
AirProductsPlatform Specialty Products
9.8%26.4%
• Appoint new leadership and restructure reporting segments to increase transparency• Restructuring of board membership and management positions
JANA Partners(Barry Rosenstein)
AshlandRockwoodFMC Corp.
7.6%3.5%3.7%
• Increase dividend and share repurchases; restructure to focus on specialty chemicals• Benefit from spin-o� of performance additives and TiO2 businesses• Not announced; FMC in process of separating into two independent public companies
FrontFour Capital/Quinpario Partners
FerroInnophos Holdings
1.6%3.3%
• Appoint new board members favorable to activist shareholder groups• Review strategic agenda and explore possible sale of the company
Cornwall Capital AmericanPacific
14.8% • Appoint new board members
Cevian Capital Alent 21.9% • Appoint new management and revise strategic direction on M&A, capex, cash returns
While share prices often benefit from activist engagement, the e�ect is often short-lived
Sources: Bloomberg; A.T. Kearney analysis
Dow Chemical (Third Point Partners)
Ashland (Jana Partners)
DuPont (Trian)
Period of above-index share priceStock price
S&P 500 Chemicals90
100110120130140
May 13 Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13Sep 13Jul 13
Disclosure of activist investor
80
100
120
140
160
Jan 13 Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13Sep 13Jul 13May 13Mar 13
Disclosure of activist investor
80
90
100
110
120
Jan 15Nov 14Sep 14Jul 14May 14Mar 14Jan 14Nov 13
Disclosure of activist investor
For more informationon on A.T. Kearney’s2015 Chemicals ExecutiveM&A Report, please visit: www.atkearney.com/chemicals