Chemicals deal activity in the first half of 2022 retreated from the fourth quarter of 2021 as chemicals companies and private equity firms globally paused to evaluate the impact of the Ukraine war, rising interest rates, a possible US recession and, most recently, China’s zero-COVID policies. While deal volume declined in the first half of 2022, deal value is outpacing the average over the last decade. The first quarter of 2022 saw the largest megadeal in the last two years: Celanese’s announcement of its acquisition of DuPont’s Mobility & Materials business for $11 billion in cash.
Despite the uncertainties, chemicals M&A activity continues to be robust, and 2022 may still turn out to be an above-average year relative to activity over the last decade. Major drivers of deal economics remain intact, including strong corporate balance sheets, record-level private equity dry powder and the increasing need for speed in business transformation and portfolio realignment.
Elevated valuation multiples in recent periods and the need to reconstruct portfolios to meet environmental, social and governance (ESG) requirements continue to motivate diversified chemicals companies to undertake portofolio reviews to unlock value. As divestitures continue to come to market, the second half of 2022 could see robust activity in terms of deal volume and value. Deal activities could be hampered if margins are squeezed from continued acceleration in energy and feedstock costs or supply chain disruptions and China’s zero-COVID policies are not resolved.
“The majority of investors remain optimistic and chemicals M&A deal activities are poised for a rebound in the second half of 2022 despite geopolitical uncertainties and recession worries casting shadows.”
Chemicals Deals Leader, PwC US
Partner, PwC US
Industrial Products Deals Leader, PwC US