Merger Candidate in Chemical Industry

Case Study Prompt

A major chemical producer has retained us to evaluate another major participant in the industry they are considering acquiring. Both companies are bulk commodity chemical producers.

We have been asked to begin our work by analyzing the future prospects of the target company’s major product line, a bulk chemical used in the production of plastics.

Essential facts include:

• Production of this chemical has slowly declined over the last five years
• Prices have declined rapidly

There are 7 to 8 major producers; the largest producer has a 30 percent share; number two has 20 percent: our target company has 15 percent; the rest is divided among other competitors.

The two largest competitors earn a small return; target company is probably at break-even; rest are operating at break-even or loss

The largest competitor has just announced construction plans for a major new plant.

How would you structure an analysis of the target company’s future prospects in this product line?

Case Interview Overview

Have an upcoming first round McKinsey interview? This interviewer led case will prepare you.

The client in the case is a major chemical producer that is considering acquiring a competitor. You’ve been asked to analyze the target company’s major product line to help inform your client if the acquisition is a smart move. In an M&A case like this, pay attention to the type of buyer you’re serving (corporate or financial). They each have different goals.

Utilize the M&A Framework to help you structure your approach to the case, but don’t stop there. In the interviewer led case, combine your business smarts and structuring experience to build a custom structure that will be most effective in solving the case problem.

The case has no math exhibits.

McKinsey Interview Tips

In this interviewer led case, focus on maintaining good structure throughout the entire process (case recap, communicating your structure, brainstorming, and presentation). McKinsey prizes structure in its case interview candidates.

To get the most out of the case, focus on coming away with 1 key takeaway or area you can improve on for next time.

Out-loud practice is the best type of case practice. Schedule time with an ex-MBB coach today to take your interview prep to the next level.