Deal Capsule Transactions in Life Sciences & Chemicals January 2021
“
2020 was an unprecedented year, as economic uncertainties from the COVID19 pandemic shook the deal landscape – including M&A activity in Life Sciences and Chemicals. Yet, the road to recovery has already begun.
”
CHRISTIAN KLINGBEIL | PARTNER, KPMG IN GERMANY
FIGURE 1: TRENDS IN LIFE SCIENCES M&A
HIGHLIGHTS — Through the COVID19 pandemic, in both sectors, 2020 deal activity went through a phase of shock followed by a recovery in deal volume in H2 2020. — For life sciences, deal volume exceeded that of the record year 2019, whereas with only five announced blockbuster deals, deal value declined by nearly 40% in 2020. Most attractive target therapies were medical devices and oncology. — The chemical sector suffered an even more severe decline after a weak prior year. While deal volume corresponds to that of 2019, deal value more than halved in 2020 with only one quasi-blockbuster deal. Yet, active portfolio management was the key deal driver. — KPMG’s Deal Thermometer indicates a recovering environment for M&A activity in both sectors.
2,130
2,449
610
597
2,611
2,530
2,832
2,768
467
2014
2015
265
222
2016
2017
296
2018
2019
Number of Announced Deals
3,161
2019 vs. 2020 14% 285
(39)%
2020
Deal Value in USD billion
Sources: Thomson One; KPMG, Germany, Analysis
FIGURE 2: TRENDS IN CHEMICALS M&A
1,117
1,133
1,151
215
233
1,127
104
2014
2015
2016
2019 vs. 2020 1,062
967
979
139
100
84
2017
2018
2019
Number of Announced Deals
1% (51)%
68
2020
Deal Value in USD billion
Sources: Thomson One; KPMG, Germany, Analysis
DEAL THERMOMETER 2020
KPMG’s Deal Thermometer signals the environment for M&A deals in chemicals and life sciences. It combines the appetite for deals (changes in forward P/E ratios) with the capacity to fund deals (changes in Net Debt/EBITDA multiples). ‘Hot’ signifies an environment conducive to deal-making.
LIFE SCIENCES DEAL APPETITE (Forward P/E ratio) 19.3
DEAL CAPACITY (Net Debt/EBITDA)
19.2 1.4x
31 Dec 2020
DEAL APPETITE (Forward P/E ratio) MODERATE
(1)%
CHEMICALS
HOT
20.0 16.2
31 Dec 2020
23% 31 Dec 2021(b)
Note: (a) Forward P/E ratios relate net profit expected for 2021 to market cap in 2020
Sources: Capital IQ; KPMG, Germany, Analysis
1.7x
1.8x
0.9x (37%)
31 Dec 2021(a)
DEAL CAPACITY (Net Debt/EBITDA)
COOL
31 Dec 2020
(6)% 31 Dec 2021(a)
31 Dec 2020
31 Dec 2021(b)
Note: (b) Deal capacity relates net debt expected for 2021 to EBITDA expected in 2021
Sources: Capital IQ; KPMG, Germany, Analysis
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