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Launching on December 16, 2025
Pre-register for the US Deals 2026 outlook
Chemical companies remain focused on realigning portfolios amid uncertainty
The chemicals sector entered 2025 with strong M&A momentum, following robust activity in late 2024 and the first quarter of this year. Driven by strategic portfolio realignment, pressure from activist investors and ample private equity (PE) dry powder, deal flow was particularly active across small to mid-sized transactions and select larger deals. Momentum slowed in recent months, reflecting broader macroeconomic and geopolitical headwinds. Key trends include:
- Macroeconomic uncertainty: Post-COVID price inflation in commodities drove record earnings for many chemical producers between 2021 and 2023. These exceptional profits — combined with broader demand uncertainty — are now causing hesitation among prospective buyers who anticipate emerging macroeconomic headwinds.
- Global trade and tariff risk: Recent shifts in US trade policy, federal spending and foreign policy have led dealmakers to curtail M&A activity. More clarity will be needed to support a rebound in the second half of 2025.
- Portfolio optimization: Reshaping portfolios remains a dominant theme, as corporations divest non-core assets to streamline operations. Chemical companies are putting European assets up for sale due to high energy prices and increased competition from newer plants in Asia and the Middle East. PE firms played a key role in mid-sized acquisitions and carve-outs, driven by narrowing valuation gaps in select subsectors.
- Steady flow of smaller and mid-market deals: Despite the merger of OMV and ADNOC and its subsequent $13.4 billion acquisition of Nova Chemicals, larger transactions remain scarce. Instead, deal activity remains concentrated in smaller and mid-market transactions. Companies are pursuing bolt-ons to expand geographic reach, access high-growth markets and low-cost feedstocks and enhance core capabilities as well as divestiture of non-core assets through ongoing portfolio pruning.
Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.
Looking ahead
Several key trends will shape a dynamic and evolving chemicals deals market in the near term. Post-election shifts in US trade and regulatory policy, stabilizing consumer demand and growing Middle Eastern investment are expected to influence deal activity in the second half of 2025. To navigate this landscape, companies should consider the following strategic priorities:
"Despite macroeconomic uncertainty, we remain cautiously optimistic that strategic acquisitions and portfolio optimization will drive growth and resilience in the chemicals sector in the second half of 2025.”
Doug Locasto,US Chemicals Deals LeaderThe bottom line
The chemicals sector experienced dynamic M&A activity, marked by significant portfolio realignments and expansion into North America — most notably the recent deal involving OMV, ADNOC and Nova Chemicals. While macroeconomic uncertainty contributes to a recent slowdown, a rebound is anticipated in late 2025. Key trends shaping the outlook include global trade dynamics, portfolio optimization, geographic expansion, evolving regulatory pressures and the growing influence of Middle Eastern investment on strategic acquisitions.
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