Acquisition Wave in the Fine Chemicals Industry (A): Clariant-BTP Acquisition

The case series “Acquisition Wave in the Fine Chemicals Industry” examines mergers and acquisitions (M&As) issues within the merging firms’ broader industry and competitive context. Most cases on M&As focus on the value of an individual deal (synergies, price, integration issues). In this case series we take another perspective. We aim to show how managers’ decisions to make an acquisition and the price willing to be paid can be influenced by merger activity taking place in the industry at the time of the decision. In particular, we illustrate how competitors’ actions influence M&A decisions in an irrational manner.

The cases allow MBA and executive participants to analyze a series of deals in 2000 by comparing transaction multiples, average premiums paid, and acquirer stock performance compared with an earlier wave of deals that took place in 1998. Movements in the stock price of the acquirers after the acquisition announcements indicate the likely value creation of each deal and allow us to estimate what a fair price would have been for the targets. The discussion will ultimately lead to the question of why the managers overpaid and the role that irrational herd behavior can play in M&A transactions. This case can be used at an early stage of the course to illustrate how a deal takes place within an acquisition wave, when competitors’ actions are likely to influence both the decisions to make an acquisition and to determine the acquisition price. Or it can be used at the end of the course to illustrate irrational aspects and herd behavior associated with M&As.