global chemicals industry—opportunities and headwinds group documents... · source: bloomberg lp...

Global Chemicals Industry—Opportunities and Headwinds

James P. Dunn, Jr., CFA Managing Director and Senior Analyst

February 18, 2016

NCAA Educational Conference 2

Economic Growth Remains Relatively Sluggish

Overall Outlook

Monetary Policy� The Fed’s initial interest rate hike came late in the cycle amid

circumstances more consistent with cutting interest rates. Policymakers will move extra cautiously.

Inflation� Slowing global economic growth and the stronger dollar are

pulling commodity prices lower and will likely restrain headline inflation for quite some time.

Fiscal Policy

� Last year’s federal budget deal will provide a slight boost to economic growth in 2016. State and local governments are also boosting spending modestly.

Global

Economy

� Slower growth in China is weighing on other economies, pushing the value of the dollar higher and presenting a threat to U.S. exports and corporate earnings.

� We continue to look for the U.S. economy to grow in the 1.7%-2.0% range in 2016. Domestic demand remains strong, which will help offset sluggish global growth.


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Real Global GDP GrowthYear-over-Year Percent Change, PPP Weights

Period Average

WFForecast

Global GDP Growth

We forecast that global GDP growth will remain below its

long-run average in 2016

Source: International Monetary Fund and Wells Fargo Securities, LLC


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U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change

GDP - CAGR: Q3 @ 1.5%

GDP - Yr/Yr Percent Change: Q3 @ 2.0%

Forecast

Real GDP Forecast

Our forecast looks for real GDP growth to remain generally solid in coming quarters, albeit likely

lower than 2015 levels

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC


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Global Economic IndicatorsYear-over-Year Percent Change

Global Industrial Production: Q3 @ 2.0%

U.S. GDP: Q3 @ 2.1%

Global Industrial Production

It would take a sharp downturn in the rest of the world to have a

meaningful effect on U.S. economic growth

Source: IHS Global Insight and Wells Fargo Securities, LLC

NCAA Educational Conference

The Strong U.S. Dollar is a Problem for the U.S. Economy

Easy monetary policy around the globe has triggered a surge in the strength of the U.S. dollar, repressing already low inflation,

restraining economic growth and having a substantial deflationary effect on the U.S. economy

While the Fed does not traditionally focus on the dollar in its policy statements, the recent surge was clearly on the Board’s

mind—they mentioned the dollar 25 times

A reported $100B was sliced off of dollar-denominated revenues at some of the U.S.’s largest multinationals in 2015

U.S. Dollar vs. S&P 500 Forward EPS

Source: Bloomberg, Thomson ONE, and Gluskin Sheff

References to the U.S. Dollar in the Fed’s Beige Book

U.S. Dollar Index

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Clearly the Strong Dollar is on the Fed’s Mind…

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The USD recently surged 6% to 8 month highs following a 26% surge in 2014…


Oil Prices: No Sign of Bottoming

Oil prices began collapsing during the second half of 2014

and have fallen further than industry analysts had expected.

The RIG count has followed oil prices lower and neither show a

sign of bottoming.

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Baker-Hughes Rig Count vs. Oil PricesOil Rotary Rigs; USD per Barrel

Oil Rig Count: Jan-22 @ 510 (Left Axis)

WTI: Jan-15 @ $30.9 (Right Axis)

Source: Bloomberg LP and Wells Fargo Securities, LLC


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ISM Manufacturing & Non-Manufacturing Composite Index

ISM Manufacturing Index SA: Dec @ 48.2

ISM Non-Manufacturing Index SA: Dec @ 55.3

Manufacturing Weakness Likely to Persist in 2016

Weakness in the economy is largely concentrated in the

manufacturing sector

Source: Institute for Supply Management and Wells Fargo Securities, LLC


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Unemployment RatesSeasonally Adjusted

Unemployment Rate: Dec @ 5.0%

U-6 Unemployment Rate: Dec @ 9.9%

U.S. Unemployment Rate

There is less slack in the labor market today

Source: U.S. Department of Labor and Wells Fargo Securities, LLC


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Real Personal Consumption ExpendituresBars = CAGR Line = Yr/Yr Percent Change

PCE - CAGR: Q3 @ 3.0%

PCE - Yr/Yr Percent Change: Q3 @ 3.1%

Forecast

Real PCE Forecast

Growth in consumer spending has ramped up in recent

quarters



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10-Yr Treasury and Federal Funds Target RatePercent

10-Year Treasury Yield: Dec @ 2.24%

Fed Funds Target: Dec @ 0.50%

U.S. Interest Rates

Short-term interest rates are headed higher, albeit at a slow

pace



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Eurozone Real GDPBars = Compound Annual Rate Line = Yr/Yr % Change

Compound Annual Growth: Q3 @ 1.2%

Year-over-Year Percent Change: Q3 @ 1.6%

Forecast

Eurozone GDP

The recovery in the Eurozone should continue, albeit at a

modest pace



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Chinese Real GDP ForecastYear-over-Year Percent Change

Year-over-Year Percent Change: Q3 @ 6.9%

Forecast

China GDP

The Chinese economy likely will continue to slow, but we do not

believe it will completely fall apart either

Source: Bloomberg LP and Wells Fargo Securities, LLC


How Exposed Is the U.S. Economy to China?

U.S. exports to China comprise about 7 percent of all U.S. exports and less than one percent of GDP. American banks have relatively little direct exposure to China, with about $100 billion of

loans or less than one percent of loans. Indirect exposure to China is likely greater, however.

Source: Bank for International Settlements, IHS Global Insights and Wells Fargo Securities, LLC

Lending to ChinaTrade Relationship

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U.S. Trade With ChinaBillions of Dollars

U.S. Exports to China: 2014 @ $124.0 Billion

U.S. Imports from China: 2014 @ $466.7 Billion

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U.S. Bank Exposure to ChinaBillions of Dollars

Total Exposure: Q2 @ $110.3 Billion

14


Will Chinese Stock Market Selloff Ruin Transition to Domestic Demand?

Since last summer the Shanghai and Shenzhen composites have introduced greater volatility in global financial markets. Unlike many developed economies, however, equity holdings of the

typical household in China comprises less than 10 percent of total financial assets.

Source: Bloomberg LP, CEIC and Wells Fargo Securities, LLC

Value AddedStock Prices

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Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Chinese Stock MarketIndex, January 4, 2013 = 100

Shanghai Composite: January 12 @ 132.8

Shenzen Composite: January 12 @ 211.4

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Financial Assets of Chinese HouseholdsTrillions of Yuan

Other: 2013 @ 6.6T Yuan

Currency: 2013 @ 4.9T Yuan

Bonds: 2013 @ 0.9T Yuan

Stocks: 2013 @ 6.4T Yuan

Insurance: 2013 @ 9.0T Yuan

Bank Deposits: 2013 @ 47.8T Yuan

15


Global Chemical Industry – Exposure by End Market

Source: Deloitte Global Manufacturing Industry Group Study on the Global Chemicals Industry


Global Construction Outlook – Mixed Depending on Geography

The outlook for construction activity varies considerably across the globe. Over the past twelve months, commodity-based economies have seen tremendous pressure.

17



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Housing StartsMillions of Units

Multifamily Starts

Multifamily Forecast

Single-family Starts

Single-family Forecast

Forecast

Housing Outlook – Slow, Steady Growth Likely to Continue

We continue to look for the gradual recovery in

homebuilding to continue.

Apartment demand remains exceptionally strong but supply

is catching up with demand.

Single-family housing starts are beginning to ramp back up.

Gains will be more modest than in past building cycles.



Electronics Outlook – The Rate of Connectivity is Growing Faster than the Population

By 2020, there will be 5.5 billion global mobile users, up

from 4.8 billion in 2015

By 2020, there will be 11.6 billion mobile-ready devices

and connections, nearly 4 billion more than in 2015

By 2020, the average mobile connection speed will increase

3.2-fold, from 2.0 Mbps in 2015 to 6.5 Mbps by 2020

By 2020, global mobile IP traffic will reach an annual run rate of 367 exabytes, up

from 44 exabytes in 2015

Source: Cisco VNI Mobile Forecast, February 2016


Power Generation / Energy Outlook

Growth in alternative energy has been driving demand. Will it continue?

20

Source: The C Three Group NA Power Transmission Project database


Paper and Packaging Markets – Outlook Mixed

Source: Domtar Presentation (November 2015) and Wells Fargo Securities, LLC

Communication Paper markets are in systemic decline and are

expected witness negative 3%-5% annual demand erosion for the

foreseeable future.

Personal care markets are benefitting from a growing middle class globally and are expected to

remain upward sloped.

Food packaging markets should continue to track global

population growth rates and are benefitting from consumers desire

for convenience.


Advertising Growth Remains Upward Sloped…Except for Print Media

22

Source: Magna Global (US Advertising Forecast Report – June 2015)

Print Media Advertising is

expected to decline to less than 6% of the total Ad pie in

2019 from nearly 34% in 2008


E-Commerce Driving Containerboard Demand Growth

Source: Forrester and Wells Fargo Securities, LLC

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E-Commerce Sales are expected to increase to $327 billion in 2016, which represents a 10%

CAGR since 2011. Elevated sales should continue to benefit

containerboard manufacturers.


Agriculture – Commodity Prices have been under Pressure

Source: Chicago Board of Trade and Bloomberg, L.P.

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Corn

Wheat

Soybeans

Crop prices have been under pressure for the past several

years as crop yields and planted acres both remain elevated. This condition is expected to persist

in 2016 as well.


Healthcare / Nutrition – Increasing Population and Life Expectancy

Source: U.S. Census Bureau, Bloomberg, L.P. and Wells Fargo Securities, LLC

Healthcare and nutrition end markets are being driven by a

combination of increasing global population and longer life

expectancies.

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Life Expectancy - USA

World Population


Motor Vehicle Sales Were Strong in 2015

Motor vehicle sales surged in 2015, possibly reflecting the increased use of incentives.

Credit terms have also been very aggressive, particularly for

subprime borrowers.

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2005 2007 2009 2011 2013 2015

Total U.S. Light Motor Vehicle SalesIn Millions, Seasonally Adjusted Annual Rate

Light Vehicle Sales: Dec @ 17.2M



Automotive Outlook – Modest Growth Expected to Continue

While global growth in 2015 slowed to an estimated 1.4%, the 87.5 million light vehicle sales represented the seventh consecutive year of growth.

Over the next five years, growth in the auto sector

should continue to be driven primarily by China. IHS

estimates that 2016-2020 auto sales of 474 million will

be up nearly 62 million compared to the prior five-

year period, with China expected to account for

approximately 50% of that increase.

Source: IHS Automotive

83.3 86.387.5

89.8 92.2 94.8 97.7 100.1102.5

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Source: IHS Automotive and Wells Fargo Securities, LLC


Where Are We in the Cycle?

Capital Availability

High

New Projects Announced

Peak Prices

Price Pressure / Investors Sell

Valuations Contract

Capital Availability

Low

Profits Contract Sharply

Valuations Improve

Orders Expanding

Expansion of Earnings

Limited Supply Provides Price

Support Write downs on Investments, Production

Cutbacks, Project Cancellations

Capital Expensive, Only Available to High Quality Names

Illustrative Cycle

Metrics and Themes Illustrative Cycle

Source: Census Bureau, University of Michigan, U.S. Energy Information Administration, Federal Reserve, FactSet

� Consumer Spending

� U.S. retail sales fell 0.1% in December and were up 2.1% in 2015

� New orders for durable goods stayed flat from the previous month, after a 3.0% increase from September to October

� Consumer sentiment index up to 92.6 in December, from 91.3 in November (January expectation of 93.3, which would be the highest reading since June)

� 2015E / 2016E Outlook: Personal consumption +3.2% / 2.8%

� Industrial Production

� Industrial production fell 0.4% in December, after decreasing 0.9% in November, primarily as a result of cutbacks for utilities and mining

� Industrial production fell at an annual rate of 3.4% in the fourth quarter

� 2015E / 2016E Outlook: Industrial production +1.6%/ 2.5%� Automotive

� Light vehicle sales in 2015 reached 17.5 million, clearing a peak last reached 15 years ago, due to cheap gasoline, employment rates and low interest rates

� 2016E / 2017E Outlook: N.A. Light Vehicle Production +1.8% /2.3%� Commercial Construction

� Total value of construction put in place rose 10.5% YoY and declined 0.4% MoM in November; (private: 12.1% and -0.2%, public: 6.0% and -1.0%, respectively)

� Fed Senior Loan Survey suggests non-residential investment to continue

� Key indicators point to meaningful growth

� 2016E / 2017E Outlook: Comm. construction spending +9.7% / 9.5%� Oil & Gas

� Concerns over pace of economic growth in emerging markets have led to a recent oil price decline

� Forward curve remains relatively flat

� 2015E / 2016E Outlook: WTI oil price down $49 per bbl/ $39 per bbl

� China

� Slowdown in the Chinese economy fueling demand concerns globally

� Government actions aimed at mitigating pullback: currency devaluation, interest rate cuts and stock purchases

28


Five Critical Key Takeaways

Economic Outlook

Weaker Global Growth� The weaker global economy continues to pull at industries closely

tied to it, creating a disinflationary undertow that is squeezing corporate profits.

Interest Rates� The Federal Reserve has begun to ‘normalize’ interest rates amid

a challenging backdrop. Policymakers will likely move very gradually and cautiously.

The Housing Recovery

� Demand for single-family homes is reviving, with first-time homebuyers beginning to come back into the market. Apartment construction is close to peaking.

The Mix of Growth is Shifting

� The economy is better for consumers than producers. Regions exposed to agriculture, energy, mining and manufacturing are seeing conditions weaken.

� The economy should weather the global economic slowdown. Exports will clearly decelerate. Real GDP was 2.4 percent in 2015 and expected to decelerate to 1.8 percent 2016.


M&A Outlook – Key Themes

� Worldwide M&A activity experienced a 31.3% increase in 2015 over 2014

levels in global, announced volume; while M&A multiples increased from

9.7x YTD 2014 to 10.8x YTD 2015

� U.S. M&A surpassed pre-crisis levels with $2,161 billion worth of deals,

surpassing the pre-crisis highs of $1,356 billion in 2007

� Interest rate dynamics, commodity price pressures, equity market

volatility and China concerns may result in a plateau in deal making in

2016 in the U.S.; deal counts likely to remain robust, but the mega-deal

wave may have crested

� Activism will continue to influence board room decisions and

responsiveness to shareholders (e.g. Dow/DD) forcing a play for spin-offs

and corporate divestitures

� Strategics may be less likely to strike mega deals or splurge on high value

assets given macro economic landscape, opening the door for Sponsors to

be more active ($700bn+ dry powder)

� Continued weakness in energy and commodity prices will result in a

challenging year for capital formation activities in these sectors; however,

strong opportunities to engage in strategic discussions with clients

regarding M&A alternatives

Business leaders and investors remain optimistic and continue to look at M&A opportunities as compelling avenues for growth

Source: Thomson Financial


Valuation 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

% Change 5.1% 0.8% 9.9% (14.9%) (8.4%) 5.1% 2.1% 0.2% 5.4% 3.4% 11.0%

$2,379

$3,248

$4,045

$2,506

$1,662

$2,155 $2,172 $2,111 $2,083

$3,201

$4,203

$1,046 $1,325 $1,356

$953

$581 $766

$907 $708

$979

$1,539

$2,161

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9.0x

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LTM

Valu

atio

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ultip

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M&

A V

olu

me

Global Volume US Volume Global Transaction Multiples

RecoveryEconomic Expansion Recession / Uncertainty

� Global M&A volume increased 31.3% year-over-year in 2015 and U.S. M&A volume increased 40.4% reflecting signs of continued optimism

� Both strategic firms and financial sponsors are flush with cash that they are looking to deploy, increasing competition for quality assets

� Cross Border M&A activity totaled US$1.6 trillion in 2015, accounting for one-third of overall M&A volume and a 27.0% increase over 2014 levels

31

Announced M&A Volume and Valuation Multiples

Valuation Increases Represent Strengthened Desire for Premium Assets

Source: Thomson FinancialNote: Excludes equity carveouts, exchange offers, open market repurchases, valuation multiples greater than 20x and all transactions valued less than $25 million

($ in Billions)


$535 $656 $804

$516 $281 $362

$517

$304 $443

$752 $923

$511

$669 $552

$437

$300 $404

$391

$404

$537

$786

$1,238

1,915

2,167 2,161

1,488

982

1,436 1,478 1,429

1,502

1,775

1,658

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f DealsM

&A V

olu

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H1 Volume H2 Volume Number of Deals

32

� The U.S. M&A market generated $2,161 billion worth of deals through 2015 compared to $1,539 billion worth of deals through 2014

� Aggregate deal value increased year-over-year by approximately 40.4%

� The total number of deals decreased year-over-year by approximately 6.6% from 2014 to 2015

� Volatility in the equity markets and the announcement of mega-deals supported a robust M&A environment as U.S. M&A dollar volume exceeded pre-crisis levels

� Total non-investment grade bond issuance in Q4 2015 decreased to $36.5 billion from $63.7 billion in Q4 2014, and the total volume of non-investment grade loan issuance in Q4 2015 increased to $73.5 billion from $66.7 billion in Q4 2014

Announced U.S. M&A Activity

M&A Market Overview: Where Do We Stand Today?

Source: Thomson FinancialNote: Excludes equity carveouts, exchange offers, open market repurchases and all transactions valued less than $25 million

($ in Billions)


YTD 2015 M&A Transaction Volume by Industry

Global 2015 United States 2015

Global 2014

Industrials18%

Energy and Power13%

Consumer & Retail12%

Financials9%

Real Estate8%

Healthcare17%

Technology12%

Telecom5%

Media and Entertainment

6%Industrials

15%

Energy and Power12%


Financials6%

Real Estate5%

Healthcare27%

Technology14%

Telecom1%


8%

United States 2014

Source: Thomson Financial Excludes open market repurchases

Industrials16%

Energy and Power15%


Financials7%

Real Estate10%

Healthcare15%

Technology7%

Telecom7%


11%Energy and Power

20%

Healthcare18%


Industrials9%

Technology9%

Real Estate6%

Financials4%

Telecom5%


17%


$36 $41

$38

$31

$85

$62

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2010 2011 2012 2013 2014 2015

Tota

l Tra

nsaction V

alu

e($

billion)

398 394 352 346 399 # of Transactions: 288

23% 48% 37% 29% 38%

Top 5 Deals as a % of Total Transaction Value:

43%

398

Announcement Date: 7/29/15 9/28/15 9/21/15 8/6/15 8/10/15 10/6/15 11/17/15 12/11/15 12/11/15 12/14/15

Target: Cytec Arizona Chemical Pinova HoldingsOCI's Distribution

BusinessesRentech Nitrogen

LPCanexus A irgas DuPont

Dow Corning (50% stake)

Wiberg GmbH

Acquirer: Solvay SAKraton Perf.

Po lymersSymrise CF Industries CVR Partners Superio r P lus A ir Liquide Dow Dow Frutarom Industries

TEV ($mm): $6,400 $1,370 $417 $8,200 $839 $713 $13,400 $157,317 $9,600 $130

Rationale: Bolt-on Expansion Expansion Expansion Expansion Expansion Expansion Expansion Expansion Expansion

14.7x

7.4x

11.1x9.5x 9.7x

8.5x

13.7x

9.5x12.0x

6.9x

0.0x

5.0x

10.0x

15.0x

20.0x

Average Deal Multiples

CY 2014 10.2x

Q1 2015 10.5x

Q2 2015 11.1x

Q3 2015 10.0x

Q4 2015 9.6x

CY 2015 10.2x

34

There Continues to be a Significant Amount of M&A Activity in the Chemicals Space

Observations

Recent Mergers and Acquisition Activity (Q1 2015 – Current)

Note: Global deal volume only includes transactions that provide transaction valuesSource: Thompson Reuters, Company Disclosures, Chemical Week, Equity Research

Global Deal Volume (2010 – 2015)

Specialty Commodity

� Air Liquide acquires Airgas (announced 11/17/15)

� Acquisition of an industrial gas company

� $13,400 million enterprise value, 13.7x TEV/LTM EBITDA

� Solvay acquires Cytec (announced 7/29/15)

� Acquisition of a specialty composites company


� A. Schulman acquires Citadel Plastics (announced 3/16/15)

� Acquisition of a specialty plastic compounder

� $800 million enterprise value, 10.7x TEV/LTM EBITDA

� Asahi Kasei and 3M acquire Polypore (announced 2/23/15)

� Acquisition of a specialty filtration company



Evolution of the Top 60 Chemical Producers: 2002 – Present

$48,111

$42,124

$27,060

$21,762

$15,319

$13,699

$13,200

$12,061

$10,724

$9,342

$7,326

$3,790

$1,984

$1,257

$0 $20,000 $40,000 $60,000

3M Company

DuPont

Dow

BASF

Bayer

Shin-Etsu

L'Air Liquide

SABIC

OccidentalPetroleum

Air Products

Average 11 - 20

Average 21 - 30

Average 31 - 40

Average 41 - 50

$94,619

$85,904

$62,838

$50,075

$49,379

$48,726

$47,975

$40,455

$40,124

$35,707

$26,370

$12,971

$8,610

$6,623

$0 $25,000 $50,000 $75,000 $100,000 $125,000

Bayer

3M Company

BASF

Dow

SABIC

OccidentalPetroleum

DuPont

Monsanto

Henkel

L'Air Liquide

Average 11 - 20

Average 21 - 30

Average 31 - 40

Average 41 - 50

1 Represents total closed deals from 1/1/2002 to 1/22/20152 Represents aggregate sums of transaction values Source: Company Disclosures, Capital IQ, Equity Research, ACC Global Business of Chemistry Report; Market data as of 1/22/2016

Top Producers in 2002 by Market Cap Top Producers Today by Market Cap

($ in millions)

Change M&A Activity

Market Cap TSR

518% 677%

79% 211%

189% 492%

85% 131%

309% 586%

354% 531%

14% 114%

704% 1,063%

378% 492%

171% 276%

289% 460%

189% 453%

232% 525%

200% 1,100%

# of Deals²Transaction

Value³

9 43,803

NA NA

40 22,188

NA NA

5 13,698

20 10,135

NA NA

25 6,828

28 11,875

38 5,726

15 9,554

13 4,117

11 1,357

15 4,041

� Market capitalizations among the top 50 producers increased three-fold since 2002, with the large having become even larger

� Key drivers include robust demand from emerging markets, capital investments to exploit North America’s low cost feedstock position and sector M&A consolidation

� By contrast, overall global chemical shipments have increased two-fold during the same period

35


The Top 50 Producers Have Been Rewarded for Large Scale, Seasoned Strategic Acquisitions

� Acquisitions have played a meaningful role in the growth of the industry’s largest players

� 12% of the largest 50 chemical companies in 2002 have subsequently been acquired by today’s top 50 producers

� Majority of transactions are strategic-to-strategic with a focus on increasing scale across core businesses and driving superior financial performance

� Global producers have targeted North American assets to increase leverage to region

� Acquirer share prices have outperformed the market for seasoned transactions, where investors have had the opportunity to see the transaction rationale play out and acquirers have reduced valuations paid by achieving significant synergies

� Investors have taken a “wait and see” approach to more recent transactions where the target has not been fully integrated by the acquirer (<3 years)

Note: Relative return is based on return above/(below) S&P Chemicals Index; acquisition time period is 2002 – 2012, capturing companies that have fully integrated target operationsSource: Company Disclosures, Capital IQ, Equity Research; Market data as of 1/22/2016

Seasoned, Large Scale M&A Transactions: Acquirer All In Return vs. S&P Chemicals Index Since Announcement

Commodity Chemicals Specialty Chemicals

Announcement Date:

01/09/06 01/24/06 11/22/06 05/21/07 08/06/07 08/13/07 12/03/07 07/10/08 07/11/08 11/12/08 03/12/10 06/22/10 04/04/11 05/31/11 07/11/11 07/20/11 01/27/12 07/26/12 10/12/12 12/14/12

Target: Engelhard BOC Quest GE PlasticsNational Starch

ICI UAP Rohm &

HaasHercules Ciba Terra Cognis Rhodia ISP Arch Nalco Solutia

Sud-Chemie

Permian Mud

AkzoNobel N.A.

Coatings

Acquirer: BASF Linde Givaudan SABICHenkel Group

Akzo Nobel Agrium Dow Ashland BASF CF BASF Solvay Ashland Lonza Ecolab Eastman Clariant EcolabPPG

Industries

TEV ($mm): $4,800 $16,593 $2,162 $11,600 $5,509 $15,868 $2,849 $18,985 $3,328 $5,500 $5,371 $3,818 $9,400 $3,200 $1,400 $8,100 $4,700 $2,496 $2,260 $1,050

TEV/EBITDA: 11.1x 10.8x NA 10.9x 16.1x 11.3x 12.9x 11.5x 8.5x 7.5x 13.4x 8.5x 7.3x 8.9x 9.5x 11.5x 9.2x 10.8x 11.3x 17.5x

Synergies as % of Target Revenue:

4.4% 4.7% 11.5% NA 13.6% 3.9% 3.5% 8.3% 5.3% 11.2% 8.6% 10.6% 4.4% 6.0% 3.6% 3.4% 4.8% 7.8% 10.7% 10.0%

TEV/Synergies Adjusted EBITDA:

7.6x 9.0x NA 10.9x 8.0x 8.9x 8.5x 7.8x 6.5x 4.1x 10.0x 4.8x 5.7x 7.8x 7.1x 9.4x 7.7x 7.2x 6.5x 5.0x

79%

30%

118%

(65%)

74%

(41%)

36%26%

93%74%

(4%)

(35%) (42%)

40%

94%73%

14%40% 46%

34%

(100%)

(50%)

0%

50%

100%

150%

200%

36


Current Campaigns

Recently Completed Campaigns

37

Activism in the Chemical Sector Continues in 2016

� ~$120 billion accumulated in activism funds necessitate another widening of the net cast by these investors, challenging management teams with enhanced scrutiny

Source: ThomsonOne, Company Disclosures; Market data as of 1/22/2016

Company Activist

Activist

Announcement Activist Demands Corporate Response

Stock Performance Since

Activist Date

S&P 500 Performance Since

Activist Date

Ashland Elmrox Investment Group 1/20/2016 Halt plans to spin off Ashland's Valvoline business

and instead seek a buyer for its specialty

chemicals unit at a time when deal-making in the

sector is robust

The Company has acknowledged input from its shareholders but

stands by its current plan

2% 1%

Intertape Polymer

Group

FrontFour Capital Group &

Zelman Capital

11/9/2015 Increase leverage and buyback shares, sell the

company, list in the U.S. and add experts to the

Board

The Company has acknowledged that it received the letter, but

has not made any further comments

5% (9%)

Axiall Franklin Resources 5/26/2015 Board of Directors should be more aggressive in

taking actions to increase shareholder value

Finalized JV ethane cracker agreement with Lotte Chemical (73%) (10%)

Royal DSM NV Third Point 7/18/2014 Sell off its non-nutrition businesses Sold off DSM Synres, Euroresins and a 65% stake in the Polymer

Intermediates & Composite Resins businesses and invested in a

sustainable resins plant

(29%) (3%)

Agrium ValueAct Capital 10/24/2014 Fine with the current strategy but plans to

monitor it

Increased dividend and sold Niota & Meredosia Storage and

Distribution assets

(6%) (2%)

Innophos FrontFour Capital Group 10/7/2014 Reduce GSTP exposure, improve capital spending

disclosures, increase dividend, increase share

repurchases and sell itself

$125 million share repurchase in 2015 and increased dividend (53%) (3%)

OM Group FrontFour Capital Group 1/9/2015 Repurchase stock, cut costs and nominated 3

candidates for the 8 member Board

Sold Company to Apollo and Platform Specialty Products NA NA

DuPont Trian Fund Management 1/8/2015 Split high growth and cyclical businesses, cut

costs and nominated 4 people for the 14 member

Board

DuPont won proxy fight against Trian, CEO stepped down since

then

(24%) (6%)

OMNOVA Barrington Capital 12/3/2014 Sell off Engineered Surfaces segment, increase

share repurchases and nominated 3 candidates

for the 8 member Board

Debt retirement, share repurchase program, increased

investment in specialty businesses & on improving core

businesses and electing 2 nominees from Barrington to the Board

along with 1 of its own choosing

(24%) (8%)

Materion GAMCO 3/6/2014 Write clauses to prevent issuance of preferred

stock for any anti-takeover purpose and

nominated 1 candidate for the 10 member Board

Wrote clauses to prevent issuance of preferred stock for any

anti-takeover purpose without shareholder approval, and

elected GAMCO's candidate to the 10 member Board

(25%) 2%

Dow Third Point 1/21/2014 Split the petrochemicals and specialty chemicals

businesses

Added 4 Board members (2 nominees from Third Point),

increased dividend, approved $5 billion share repurchase,

increased divestitures from $4-$5 billion to $7-$8.5 billion

0% 4%

LSB Industries Starboard Value 12/30/2013 Spin off air conditioning and heating business,

place chemical assets in a MLP and replace 7 of

the 14 Board members

Separating chemical and climate control units, exploring MLP

structure for chemical unit, reduced Board size from 14 to 13,

replaced senior leadership, , elected 5 StarBoard nominees to

the 13 member Board & added 3 of them to a new Strategic

Committee

(87%) 4%

Calgon Carbon Starboard Value 11/4/2013 Repurchase stock, place U.S. activated carbon

assets into an MLP and further reduce costs

Increased share repurchase program by $100 million, increased

the cost improvement program and signed 2 long-term coal

supply contracts

(23%) 8%

CF Industries Third Point 7/29/2013 Increase dividend Increased dividend (17%) 13%

DuPont Trian Fund Management 7/13/2013 Split high growth and cyclical businesses Performance Chemicals spinoff, $5 billion share repurchase and

cost reduction initiatives

1% 13%

Ashland Jana Partners 4/11/2013 Held discussions with Ashland regarding

capitalization, operations and strategy

Sold its water technologies business, restructured the business

into 3 units and hired a new CEO effective 1/1/15

27% 20%

Air Products Pershing Square 3/31/2013 Restructure the company, replace the CEO and

nominated 3 candidates for the 11 member Board

Initially added poison pill shareholder-rights plan, but ultimately

restructured the business, added 3 members to the Board,

replaced CEO, increased dividend and is divesting Materials

Technology segment

37% 22%

Ferro Corporation FrontFour 2/8/2013 Restructure the company, nominated 3

candidates for the 11 member Board and be a

part of the search for the new CEO

Added 3 Board members (2 nominees from FrontFour), formed a

Strategic Committee, sold Specialty Plastics division, refinanced

debt, acquired Tile Coatings Manufacturer and sold North

America based Polymer Additives business

77% 26%

Calgon Carbon Starboard Value 1/22/2013 Nominated 3 candidates for the 8 member Board Increased size of the Board from 8 to 9 members and elected 2

of the nominees

(3%) 28%


M&A Activity Accelerated in 2014 and Remained Strong in 2015

Note: Includes selected transactions with disclosed valuation multiplesSource: Capital IQ, Company Disclosures, Equity Research, FactSet, Press Releases

Selected Recent Mergers and Acquisition Activity

Close

Date

Target

(Partial)Acquirer Target Business Description

Implied

Transaction

Value

LTM

EBITDA

TV / LTM

EBITDA

Specialty /

CommodityRegion

Pending Wiberg GmbH Frutarom Industries Develops spices, additives and flavor extracts, serving the processed meat and convenience food markets

$130 $19 6.9x Specialty Europe

Pending Dow Corning (50% stake) Dow Manufactures silicone-based materials including fluids, gels, greases and resins, serving the electronics, automotive, construction, textiles and healthcare end markets

$9,600 $800 12.0x Specialty North America

Pending DuPont Dow All-stock merger of Dow and Dupont with anticipated tax-free separation into three independent companies: Agriculture Business, Material Science Business and Specialty Products Business

$157,317 $16,585 9.5x Commodity North America

Pending Airgas Air Liquide Supplies industrial, medical and specialty gases serving the industrial, medical, construction and food & beverage end markets


Pending Canexus Superior Plus Produces chlorine and caustic soda for the pulp & paper, industrial bleach, water treatment, oil & gas and distribution markets

$713 $84 8.5x Commodity North America

Pending Rentech Nitrogen LP CVR Partners Produces and sells nitrogen fertilizer products in the United States and internationally


Pending OCI's Distribution Businesses CF Industries Global producer and distributor of nitrogen fertilizers and methanol $8,200 $864 9.5x Commodity North America

1/7/2016 Pinova Holdings Symrise Provider of ingredients from natural and renewable sources used in the production of perfumes, fragrances and oral care products

$417 $37 11.1x Specialty North America

1/6/2015 Arizona Chemical Kraton Perf. Polymers Leading global producer of highly-engineered polymers derived from pine wood pulping co-products for the adhesives, roads & construction, fuel additives/lubricants, and oilfield chemicals end markets


12/9/2015 Cytec Solvay SA Composite materials and mining chemicals manufacturer $6,400 $433 14.7x Specialty North America

12/9/2015 Magenta Master Fibers PolyOne Corporation Innovative developer of specialty solid color concentrates for the global fiber industry


12/1/2015 Alent Platform Specialty Products

Global supplier of specialty chemicals and engineered materials $2,254 $172 13.1x Specialty Europe

10/28/2015 Argotec Schweitzer Mauduit Leading manufacturer of thermoplastic polyurethane $215 $23 9.3x Specialty North America

10/28/2015 OM Group

(Electronic Chemicals & Photomasks)Platform Specialty Products

Offers chemicals and photomasks for the electronics and semiconductor markets $365 $28 13.0x Specialty North America

10/28/2015 OM Group Apollo Global Offers magnetic, battery and specialty chemical technologies for the semiconductor, automotive, industrial, and energy markets


10/23/2015 OCI Resources LP

(73% LP + 2% GP interest)Ciner Group Trona based soda ash producer $578 $125 7.5x Commodity North

America


M&A Activity Accelerated in 2014 and Remained Strong in 2015

Note: Includes selected transactions with disclosed valuation multiplesSource: Capital IQ, Company Disclosures, Equity Research, FactSet, Press Releases

Selected Recent Mergers and Acquisition Activity

10/6/2015 Dow Chlorine Products Olin Produces chlorine, caustic soda, epoxy resins and chlorinated organics for the alumina, pulp & paper, industrial bleach, water treatment, coatings, foams, refrigerants, polyvinyl, construction, adhesives and electronics markets

$5,000 $640 7.8x Commodity North America &

Europe

10/1/2015 AVINTIV Berry Plastics Global leader in nonwovens, plastic packaging and specialty materials with a focus on the personal care, hygiene, healthcare, wipes, filtration and construction markets


8/26/2015 Polypore Asahi Kasei & 3M Produces thermocomposites and thermoplastic compounds for transportation, industrial, construction and consumer applications


8/3/2015 GrowHow UK

(50% Stake)CF Industries Largest UK producer of nitrogen fertilizer $1,160 $147 7.9x Specialty Europe

7/31/2015 Dow AgroFresh

(60% stake)Avenue Capital Provides post-harvest specialty chemical solutions to help preserve crop quality $879 $95 9.3x Specialty North

America

6/26/2015 Zep New Mountain Capital Produces cleaning and maintenance chemicals for the sanitation, industrial, personal care and automotive markets in North America and Europe


6/3/2015 Citadel Plastics A. Schulman Produces thermocomposites and thermoplastic compounds for transportation, industrial, construction and consumer applications


4/21/2015 Cheminova FMC Multinational crop protection company that also provides organophosphorous intermediates used in producing of its plant protection products

$1,800 $149 12.1x Specialty Europe

4/7/2015 Axalta Coating Systems

(9% stake)Berkshire Hathaway Manufactures performance coatings for the transportation and industrial markets $6,222 $841 11.3x Specialty North

America

4/2/2015 FMC

(Alkali Chemicals)Tronox World leader in producing trona-based products such as soda ash $1,640 $164 10.0x Specialty North

America

3/16/2015 DSM - Polymers and Resins

Businesses

CVC Capital Partners Global provider of caprolactam, acrylonitrile and composite resins $813 $131 4.8x Commodity Europe

3/11/2015 Penford Ingredion Develops, manufactures and markets specialty ingredient systems for a variety of food and industrial products


2/17/2015 Arysta LifeScience Platform Specialty Products

Global leader in crop protection and life sciences. Specializes in marketing and distributing crop protection brands and plant nutrition products


2/3/2015 Dow Angus Golden Gate Capital Produces nitroalkanes and their derivatives $1,215 $110 11.0x Specialty North America

2/3/2015 Bostik

(Subsidiary of Total)

Arkema S.A. Leading global adhesives specialist in industrial manufacturing, construction and

consumer markets

$2,250 $205 11.0x Specialty Europe

2/2/2015 Tonsan Adhesive H.B. Fuller Company Largest independent engineering adhesives producer in China $225 $20 11.3x Specialty Asia

1/12/2015 Rockwood Albemarle Provider of lithium and surface treatment for battery, metal procession, aerospace, and automotive markets


Close

Date

Target

(Partial)Acquirer Target Business Description

Implied

Transaction

Value

LTM

EBITDA

TV / LTM

EBITDA

Specialty /

CommodityRegion


North American Chemicals Market Landscape

Chemical Equities Have Come off Record Trading Levels with the Decline in Oil and Weaker Ag Fundamentals

� Select chemical stocks across subsectors underperformed the S&P 500 by ~7% YTD 2016� Since oil peaked on 6/19/2014, chemical stocks have underperformed by ~24%� Analysts remain bullish on the sector with 53% Buy | 45% Hold | 2% Sell ratings, with average

upside to target price of ~19% � Compares to 51% Buy | 46% Hold | 3% Sell a year ago, and average upside of ~10%

Robust M&A Activity

� ~$62 billion in 2015 North American chemical sector volume driven by portfolio optimization, consolidation and sponsor activity

� Strategics focus on deals which enhance core businesses and drive financial performance as internal plans do not support investor growth expectations

� Financial buyers have significant capital uninvested, combined historically low cost debt

After a Drought, IPOs Reemerged but with Mixed

Results

� Market receptivity to new chemical equity issuances in North America has been unfavorable� Univar down 40% since its June 2015 IPO (diversified specialty chemical distributor)� Chemours down 77% since its July 2015 spin-off (highly-levered commodity player)� Rayonier Advanced Materials down 80% since its January 2014 spin-off (fibers market in a

secular decline)

Refinancings / New Issuances Continued Amid Low Rates but Have Stalled Recently

� Debt refinancings and new issuances continued in 2015 driven by historically low rates� $13.2 billion in Investment Grade chemicals transactions in 2015, down 42.8% YoY� $7.3 billion in High Yield chemicals transactions in 2015, more than double the 2014 amount� $29.0 billion in Term Loan B chemicals transactions in 2015, down 17.8% YoY

Changing Strategic Landscape

� Market capitalizations among the top 50 producers has increased three-fold since 2002� The large have gotten larger, accelerated by mega-mergers (Dow-DuPont, Air Liquide-Airgas)� Greater scale is in turn enabling a refocus with DowDuPont, Air Products and Ashland all

expected to execute spin offs in 2016

� Lower oil prices, monetary stimulus and end market growth support continued favorable conditions for North American chemical producers� Strong fundamentals in auto production, construction and consumer spending

� The global economy remains characterized by a moderate and uneven recovery, accompanied by subdued inflation

� Emerging markets are mixed with a slow down in China fueling demand concerns globally

Current Macro Trends Support Continued Growth

for the Chemicals Sector, but at a More Modest Clip

40


57

28 20

40

60

80

100

120

6/14 9/14 12/14 3/15 6/15 9/15 12/15

Indexed S

hare

hold

er

Retu

rn

Commodity Index Crude Oil

41

Commodity Producers: Impact of Lower Oil Prices

…and Valuation Multiples have DecreasedCommodity Producers have Traded Down as Crude Prices Slide…

% Change in Feedstock Price Required to Match Ethane Cash Costs

6/19/2014

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

0

50

100

150

200

250

300

Propane Butane Naphtha Gas Oil

Perc

ent

Change R

equired

Feedst

ock

Price

(c

ents

/gallon)

Actual Feedstock Price Required Feedstock Price % Change in Feedstock Price

Upside to Price Target

6/19/2014 1/22/2016

1.8% 24.3%

6.4x

7.4x

6.0x

7.0x

8.0x

9.0x

10.0x

1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16

EV /

NTM

EBIT

DA

Commodity Index Average

R-Squared

0.89

Peak Oil Price6/19/2014

Note: See Appendix for Indices Details. Index excludes Sinopec Shanghai Petroleum Co.Source: Equity Research, FactSet, IHS; Data as of 1/22/2016

Today (1/21/2016)

(40%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

0

50

100

150

200

250

300

Propane Butane Naphtha Gas Oil

Perc

ent

Change R

equired

Feedst

ock P

rice

(cents

/gallon)

Actual Feedstock Price Required Feedstock Price % Change in Feedstock Price

� The change in oil prices over the past few months has eroded the North American ethane price advantage versus naphtha to 6% (from 31% before oil collapsed)

� Ethane is no longer advantaged relative to such other feedstocks as propane and butane


40

60

80

100

120

140

160

1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16

Indexed S

hare

hold

er

Retu

rn

Diversified Specialty Health & Nutrition Industrial Gases

Industrial Minerals Paints & Coatings

42

Scale Drives Higher Valuations Across Specialty Chemicals Peers

Current Valuations are Mixed Relative to Historic AveragesDownstream Specialty Sectors have Outperformed

5-Year Average TEV / NTM EBITDA

8.0x 8.8x

9.6x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

<$2.5 Billion $2.5-$10 Billion $10 Billion+

EV /

NTM

EBIT

DA

Enterprise Value

6.0x

8.0x

10.0x

12.0x

14.0x

1/14 4/14 7/14 10/14 1/15 4/15 7/15 10/15 1/16

EV /

NTM

EBIT

DA

Diversified Specialty Health & Nutrition Industrial Gases

Industrial Minerals Paints & Coatings

Industrial Minerals Industrial Gases Diversified Specialty Paints & Coatings Health & Nutrition

2-Year TSR (26.5%) (13.0%) (13.0%) 4.9% 26.3%

1-Year TSR (21.3%) (16.1%) (6.1%) (13.1%) 0.0%

Diversified Specialty Industrial Minerals Industrial Gases Paints & Coatings Health & Nutrition

Current 8.0x 9.3x 10.0x 10.2x 11.5x

2-Year Average 9.0x 8.9x 10.6x 11.4x 11.9x

Note: See Appendix for Indices DetailsSource: Capital IQ, Equity Research, FactSet; Data as of 1/22/2016

Current TEV / NTM EBITDA

8.3x

9.3x

10.3x

7.0x

7.5x

8.0x

8.5x

9.0x

9.5x

10.0x

10.5x

11.0x

11.5x

12.0x

<$2.5 Billion $2.5-$10 Billion $10 Billion+

EV /

NTM

EBIT

DA

Enterprise Value


Chemicals High Yield and High Grade Trading Levels Continue to Rise

High Yield Trading History

Investment Grade Trading History

6.58%

9.75%

10.54%

4.00%

5.50%

7.00%

8.50%

10.00%

11.50%

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

YTW

BB Index B Index HY Chemicals Index

3.03%

4.41%

3.24%

2.00%

3.00%

4.00%

5.00%

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

YTM

A Index BBB Index IG Chemicals Index

Note: High Yield Chemicals Index composed of Ashland, Axiall, Borden, Celanese, Chemtura, Cornerstone, Eagle Spinco, Eco Services, Graftech, Hexion, Huntsman, Ineos, JAC Holding, JM Huber, Kissner Milling, Koppers, Kraton, LSB, Nexeio, Nova Chemicals, NuFarm, Olin, Omnova, Perstorp, Polymer Group, Polyone, PQ Corp, Reichhold, Rentech, Rockwood, SPCM and TamincoNote: Investment Grade Chemicals Index composed of Abbott Laboratories, Abbvie, Actavis, Agrium, Air Products & Chemicals, Albemarle, Allergan, Amal LTD, American Home Products Corp, Amgen, AstraZeneca, Baxalta, Bayer Corp, Bio-Rad Laboratories, Biogen, Bristol-Myers Squibb, Cabot Corp, Celgene, Celulosa Arauco y Construction SA, CF Industries, Church & Dwight, Clorox, Colgate Palmolive, CVS Health, Cytec Industries, Dow Chemical, DuPont, Eastman, Edwards Lifesciences, Eli Lilly & Co, EMD Finance, Estee Lauder, FMC Corp, Forest Laboratories, Genentech, Genzyme, Glaxosmithkline, Hexcel, Hospira, IMC Global, Incitec Pivot, International Flavors & Fragrances, Johnson & Johnson, SC Johnson & Son, Lubrizol, LyondellBasell, Mapco, Merck & Co, Methanex, Monsanto, Morton International, Mosaic, Mylan, NewMarket Corp, Novartis, Pfizer, Pharmacia Corp, Potash Corp, PPG Industries, Praxair, Proctor & Gamble, Roche Holdings, Rohm & Haas, RPM International, Sanofi-Aventis, Schering Plough, Sherwin Williams, Syngenta, Takeda, Teva, Union Carbide, Valspar, Watson Pharmaceuticals, Westlake Chemical, Wyeth, Yara International, Zeneca Wilmington, ZoetisSource: Advantage Data and BofA Merrill Lynch Global Index System; Market data as of 1/22/2016

43


Wells Fargo’s Historical High Grade Bond Bookrunning Leadership Across the Chemical Industry

Size Tenor Coupon Spread

Issue Date Issuer Moody's S&P ($M) (yrs) Maturity (%) (bps)

7/22/2015 The Valspar Corporation Baa2 BBB 350 10 1/15/2026 3.950% 168

1/29/2015 Praxair, Inc A2 A 150 2 2/3/2017 FFE+33 33

1/29/2015 Praxair, Inc A2 A 400 10 2/5/2025 2.650% 95

1/29/2015 Praxair, Inc A2 A 200 30 TAP 11/7/2042 3.550% 125



12/1/2014 Albemarle Corporation Baa3 BBB- 700 EUR 7 12/8/2021 1.875% 140

11/17/2014 Albemarle Corporation Baa3 BBB- 250 5 12/1/2019 3.000% 140



11/5/2014 Cytec Industries Inc Baa2 BBB- 250 10 5/1/2025 3.950% 160

10/9/2014 INVISTA S.à r.l. Ba1 BBB 750 5 9/15/2019 4.250% 270

7/28/2014 Air Products & Chemicals A2 A 400 10 7/31/2024 3.350% 90

6/12/2014 Airgas, Inc Baa2 BBB 300 10 7/15/2024 3.650% 108

5/6/2014 Eastman Chemical Baa2 BBB 500 30 10/15/2044 4.650% 135

11/7/2013 Mosaic Company Baa1 BBB 900 10 11/15/2023 4.250% 168



2/26/2013 Cytec Industries Inc Baa2 BBB 400 10 4/1/2023 3.500% 170



12/4/2012 Sherwin-Williams Company A3 A 700 5 12/15/2017 1.350% 75

12/4/2012 Sherwin-Williams Company A3 A 300 30 12/15/2042 4.000% 125


10/18/2012 RPM International Inc Baa3 BBB- 300 10 11/15/2022 3.450% 165

7/30/2012 Praxair, Inc A2 A 500 10 8/15/2022 2.200% 72

7/9/2012 Monsanto Company A1 A+ 250 10 7/15/2022 2.200% 70

7/9/2012 Monsanto Company A1 A+ 250 30 7/15/2042 3.600% 100



Source: Bloomberg & Wells Fargo Securities

2014-2015 High Grade Chemical League Table

Rank Underwriter

Number of

Deals

Market

Share

1 Bank of America Merrill Lynch 15 19.5%

2 Wells Fargo Securities 9 11.7%

2 J.P. Morgan 9 11.7%

4 Citigroup 7 9.1%

5 Goldman Sachs 6 7.8%

6 Morgan Stanley 5 6.5%

7 HSBC 4 5.2%

7 Deutsche Bank 4 5.2%

7 RBC 4 5.2%

10 Credit Suisse 3 3.9%

Value-Added Role as a Bookrunner

Avg. New Issue Concession

Avg. Orderbook Oversubscription

2.03 bps

7.00 bps

0 bps

3 bps

6 bps

9 bps

4.4x4.0x

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Chemical Bonds Since 2014 WFS Active BooksChemical Bonds Since 2014 WFS NOT Active Books

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#1 Bank Brand GloballyBrand Finance (2014)

Wells Fargo has Built a Top-Tier Investment Bank with Significant Momentum

Source: Wells Fargo unless otherwise specified; Market Capitalization and CDS spreads as of 1/22/2016 per Capital IQ; all other data as of FY 2014 unless otherwise notedNote: All market share and league table information reflects domestic rankings and/or market share1 Includes equity and equity-linked transactions

#1 Lead Bank to Middle Market Companies

Largest Market Capitalization of U.S. Banks;

AA- Credit Rating

#3 in U.S. Investment Banking Transactions

~1,900 Capital Markets and Advisory Executions in 2014

Leading Market Positions in:

� High Grade Bonds� High Yield Bonds� Asset-Based Lending� Leveraged Loans� High Grade Loans� Common Equity� Convertible Bonds

Among World’s 50 Most Admired Companies

FORTUNE 2014

Key 2014 Achievements

2014 Result Comparison to 2010

IBCM Revenue Up 41%

ECM Book-run Transactions 1 Up 46%

#3 High Yield Platform Up from #8

M&A Volume Up 69%

Current Market Capitalization

5-Year CDS Spreads

($ in Billions)

$250

$210

$141$121

$69$49 $46 $35 $26

6377

8595 96

103 105 105

128($ in Billions)

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Representative Clients

Wells Fargo’s Global Chemicals Investment Banking Practice

Commodity Agriculture Specialty

Wells Fargo’s dedicated Global Chemicals practice provides comprehensive advisory and capital-raising services to private & public companies and financial sponsors

Key relationships with leading chemical companies and investors across the space

Over $6.8 billion in committed capital dedicated to the Global Chemicals sector

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Disclaimer

This document and any other materials accompanying this document (collectively, the “Materials”) are provided for general informational purposes. By accepting any Materials, the recipient thereof acknowledges and agrees to the matters set forth below in this notice. Wells Fargo Securities makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of any information in the Materials. Information in the Materials is preliminary and is not intended to be complete, and such information is qualified in its entirety. Any opinions or estimates contained in the Materials represent the judgment of Wells Fargo Securities at this time, and are subject to change without notice. Interested parties are advised to contact Wells Fargo Securities for more information. The Materials are not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described herein. The Materials are not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. No person providing any Materials is acting as fiduciary or advisor with respect to the Materials. You must consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other aspects of the Materials. Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Institutional Securities, LLC, a member of FINRA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC carries and provides clearing services for Wells Fargo Institutional Securities, LLC customer accounts. Notwithstanding anything to the contrary contained in the Materials, all persons may disclose to any and all persons, without limitations of any kind, the U.S. federal, state or local tax treatment or tax structure of any transaction, any fact that may be relevant to understanding the U.S. federal, state or local tax treatment or tax structure of any transaction, and all materials of any kind (including opinions or other tax analyses) relating to such U.S. federal, state or local tax treatment or tax structure, other than the name of the parties or any other person named herein, or information that would permit identification of the parties or such other persons, and any pricing terms or nonpublic business or financial information that is unrelated to the U.S. federal, state or local tax treatment or tax structure of the transaction to the taxpayer and is not relevant to understanding the U.S. federal, state or local tax treatment or tax structure of the transaction to the taxpayer.IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in the Materials is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax penalties or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. ©2015 Wells Fargo. All Rights Reserved.

global chemicals industry—opportunities and headwinds group documents... · source: bloomberg lp...

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