Deal Capsule Transactions in Life Sciences & Chemicals October 2020
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M&A activity in Life Sciences and Chemicals remains below prior year, amplified by economic uncertainties from COVID-19.
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CHRISTIAN KLINGBEIL | PARTNER, KPMG IN GERMANY
FIGURE 1: TRENDS IN LIFE SCIENCES M&A
HIGHLIGHTS — Global market uncertainties and risks from COVID-19 continue to subdue M&A activity in life sciences and chemicals. — Life sciences deal activity exceeds prior year, given a revival of M&A activity in Q3 2020. Despite the drop in YTD 2020 deal value, Q3 2020 has recorded two new blockbuster deals so that Q3 deal value accounts for more than half of the deal value in YTD 2020. Clearly, oncology deals were the major drivers in this quarter. — Even though the gap in deal volume has widened in Q3 2020 for the chemical sector, its first quasi-blockbuster deal of the year was announced recently. — KPMGs Deal Thermometer signals a continuing slowdown with recovery tendencies for M&A.
2,130 2,449 2,530 2,611 610
2,832 2,768
2,131 2,237
Q1-Q3 2019 vs. 2020
597 265
296
5%
467
363
222
(55)%
162
Q1-Q3 Q1-Q3 2019 2020
2014 2015 2016 2017 2018 2019 Number of Announced Deals
Deal Value in US$ billion
Sources: Thomson One; KPMG, Germany, Analysis
FIGURE 2: TRENDS IN CHEMICALS M&A
1,117 1,133 1,151 215
1,127 1,062
Q1-Q3 2019 vs. 2020
967
233
104
100
84
139
2014 2015 2016 2017 2018 2019 Number of Announced Deals
756
687
123
43
(9)% (65)%
Q1-Q3 Q1-Q3 2019 2020 Deal Value in US$ billion
Sources: Thomson One; KPMG, Germany, Analysis
DEAL THERMOMETER Q1-Q3 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)
CHEMICALS
HOT
DEAL CAPACITY (Net Debt/EBITDA)
DEAL APPETITE (Forward P/E ratio)
18.6
17.2
MODERATE
1.2x
18.4 14.4
DEAL CAPACITY (Net Debt/EBITDA) 1.8x
1.7x
0.8x 8% 30 Sep 2020
28%
(35%) 30 Sep 2021(a)
30 Sep 2020
30 Sep 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
COOL
30 Sep 2020
5% 30 Sep 2021(a)
30 Sep 2020
30 Sep 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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