PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for the rest of 2021.
The chemicals sector’s deal volumes continued to rebound through the first half of 2021 primarily due to favorable fiscal and monetary policies that led to the stabilization of global capital markets. Deal values, however, have remained depressed with a near absence of megadeals over the past 12 months, with the largest deal in 2021 being Bain Capital and Cinven’s acquisition of Lonza’s speciality chemical business for $4.7 billion. Comparatively, megadeals accounted for approximately $115 billion in 2019 deal value prior to the COVID-19 pandemic.
With light at the end of the tunnel, major global economies have been on a path of recovery of industrial production activities in the past few months. While there are still great uncertainties about how the world will be shaped after the pandemic, the chemicals industry — as the cornerstone of industrial manufacturing — has begun to benefit from economic recovery, modest inflation and ample availability of capital. To navigate a lingering uncertainty, chemical companies will need to redefine their value chains, address significant disruptions to operations and reevaluate their global supply chain and footprint. As such, we anticipate chemicals’ M&A activities will continue to increase for the remainder of 2021.
“The recovery of the global economy from COVID-19 pandemic will drive increased activities in Chemicals M&A for the remainder of 2021.”