No Match Found
Chemicals industry deal value and volume in the first half of 2023 steadily recovered from the third quarter 2022 low, despite high interest rates and looming worries of the possibility of a global recession. Chemicals dealmaking activity is driven by various factors, including attractive valuation, capital availability and the pursuit of strategic acquisitions to enhance market presence and competitiveness. Looking ahead, we expect the chemicals M&A market to maintain its momentum in the second half of 2023, driven by continued demand for transformative deals, cross-border collaborations and the pursuit of sustainable solutions to address environmental challenges.
Anticipating an easing of tight monetary policy globally, chemicals M&A experienced a modest recovery in recent months. As central banks signal a shift towards a more accommodative stance, global chemicals giants and mega private equity firms have come back to the table to take advantage of attractive valuation and cash on hand. In particular, deal activity in North America experienced some recovery with the announcements of several megadeals, as the US economy remains resilient. Deal activity in Europe remained muted amid margin pressure from significant increases in feedstocks as a result of the ongoing war in the Ukraine. While a recovery of China's economy has not materialized, the ongoing restructuring of the global chemical supply chain continues to drive M&A activities in Asia. Additionally, the attractive valuation of publicly traded chemical companies led to several multi-billion dollar tender offers initiated by investor consortiums backed by mega private equity firms and Middle Eastern petrochemical giants.
A loosening of monetary policy — if it materializes — is expected to stimulate economic growth and bolster market confidence, creating a conducive environment for chemicals M&A activity in the near- to medium-term. Companies may seize this opportunity to pursue transformative deals, consolidate market positions and capitalize on synergies and economies of scale. In the meantime, divestiture of non-core assets from portfolio optimization, surveying of supply chain and increasing pressure on companies to decarbonize and fulfill sustainability obligations remain fundamental themes expecting to drive M&A in the short-term.
Companies face markets being reshaped by technology and disrupted by geopolitical unrest, a global pandemic and economic shocks. As a result, CEOs are turning to transformative acquisitions to reposition and reinvent their businesses for long-term success. Companies are also beginning to crack the code on how to make big, transformative deals successful: leveraging experience, early and sustained investment in integration, and a commitment to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s new M&A integration report.
“Chemical M&A is at a pivot point to rebound from a multi-year low as the global economy proves to be resilient.”