Chemicals: Deals 2022 outlook
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What's driving deals in 2022
PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for 2022.
Chemicals M&A activity accelerates
Chemicals M&A volume and value rebounded strongly in the second half of 2021 with operating margins widening as pent-up consumer demand provided a boost to the major economies. Deals value in the third quarter of 2021 alone outpaced total value of the first half of 2021 due to several megadeals (Platinum Equity-Solenis, PTTGC-Allnex, MKS-Atotech). Through the first six weeks of the fourth quarter of 2021, activity accelerated further, with Sika’s acquisition of MBCC for $6 billion and DuPont’s acquisition of Rogers for $5.2 billion. With these megadeals, we expect the fourth quarter of 2021 to be the most active quarter in the last two years in terms of both deal volume and value.
Chemicals deals outlook
Chemicals M&A activity surged in the past six months as the global economy recovers from the pandemic. The US chemical industry could experience a full recovery in 2022 if the pandemic continues to ease, vaccines become widely available globally and pent-up consumer demand provides a boost as economies reopen and restrictions lift. Chemicals companies executives are becoming more optimistic as operating margins improve from the pandemic trough, and are therefore more willing to position capital for growth. While increasingly elevated deal multiples could potentially temper buyers’ interests, the multiples have drawn out more sellers, including private equity firms looking for an earlier exit and corporates hoping to monetize non-core assets. We also expect a comeback of private-equity-sponsored chemicals deals to continue if the capital market remains upbeat and financing costs remain low. As such, we anticipate chemicals M&A activities will continue to be robust in 2022.
“Despite elevated deal multiples and the uneven recovery of global economies from the pandemic, all indicators point to the chemicals M&A boom showing no sign of abating in the first half of 2022.”
