CHEMICALS
OVERVIEW
Much like the polymers involved in the science, the value chain of chemicals is complex, and DPO&Co understands these complexities. While we are not experts in forecasting changes in the volatile hydrocarbons that serve as chemical feedstocks, we are able to add substantial value to our clients by setting strategies for various end users in agriculture, automotive, building materials, electronics, packaging and more. We have deep knowledge in this consolidating competitive landscape and can assist stakeholders throughout this value chain.
CASE EXAMPLE
4-Week Diligence: Served as “clean team” prior to a combined $80B revenue chemical merger and subsequent carve outs, specifically designed to capture $3B cost synergies promised to the street
Situation
- Both companies were diversified companies, with lower economic profit and shareholder returns than specialty chemicals competitors
- One of the two firms had spent significant effort on managing overhead, with a slightly higher focus on commodity items, while the partner had more of a specialty focus, but higher SG&A cost margins
- Volatility in both the upstream and end customer commodity markets was challenging performance forecasting
- Both companies were facing activist investor pressures calling for a breakup of the businesses and one firm had put one business line "in play"
- In order to meet regulatory requirements and focus strategy, the combined companies announced plans to combine, but then immediately divide into three companies, adding substantial complexity
Approach
- Conducted public desk research and gathered confidential data from each company in secure place, taking extra measures to safegaurd information in the event of a merger breakup
- Designed three phase merger and separation plan for pre-close, interim structuring/transitioning and stand-alone business stabilization with a constant focus on the "to be" state
- Identified strategies for the six things the companies needed to get right to succeed
- Business Structure & Integration
- Synergy Capture
- Regulatory Approval
- Tax Structure
- Separation Readiness
- Cultural and HR Alignment
Impact and Results
- Robust strategy to leverage scale on feedstock procurement to exceed synergies promised to the street
- Overhauled supply chain to operate in end state business functions (post diligence)
- Detailed growth strategy with broad product portfolio scope, improved channel position and strong R&D