"The cosmetics industry shows an increased demand for products that improve the appearance, such as anti-aging and anti-sun creams, and there does seem to be a strong secular growth story to those markets even in a recession," said J.P. Morgan Cazenove's Martin Evans.
The suppliers to cosmetics and consumer goods companies owe their high growth rates in part to their exposure to buoyant Asian markets and enjoy stable raw material bills as their products are made from plant extracts.
A wide range of exotic seeds, nuts, and grains sourced from across the world go into the making of natural oils and butters rich in essential fatty acids that enhance the quality of skin and haircare products.
"Consumer care is predominantly a wealthy sector, with exposure to areas of high GDP and high per-capita income," said W.H. Ireland's Keith Ashworth-Lord. "It's a great place to be."
European analysts say the top targets include UK's Croda, Germany's Symrise and Switzerland's Clariant. Croda shares have shot up 58 percent since the beginning of the year, while Symrise has gained more than 31 percent and Clariant 8 percent, compared to a 1.4-percent fall in the European chemicals sector index.
Potential suitors are said to include Solvay, Akzo Nobel and DSM.Recent history has shown that chemicals companies get taken over at around a 50-percent premium to the undisturbed share price, analysts noted.
They believe future offers would also have to be made at high premiums -- at least in the range of 25 percent to 33 percent -- for further consolidation in the sector.
As the acquisitions of Cognis by BASF, Feixiang Chemicals by Rhodia have shown in the past, majors would not shy away from paying the "extra" premium for access to a portfolio of products that come armed with pricing power.
"The cosmetic ingredients market is the place to be for European MNC (multinational corporation) chemicals companies," said Berenberg Bank analyst Jaideep Pandya.