Decarbonization-based M&A, which dropped to just 3% of deal value in 2022, increased by 200% in related deal values—the surge is expected to continueEurope’s chemicals M&A deals dropped from 41% in 2022 to 26% in 2023, while deal share in Asia and North America roseChemicals execs expect faster deal movement from strategics than from PE investors
CHICAGO, June 3, 2024 /PRNewswire/ — Today global management consultancy Kearney releases a new report, Chemicals M&A: deal activity remains sluggish but rebound signs are there, which discusses industry trends and makes predictions for mergers and acquisitions (M&A) activity in the chemicals sector for the coming year. “Pressure is mounting for the chemicals M&A market to open up,” noted Andrew Walberer, Kearney partner and co-author of the 2024 Chemicals Executive M&A Report. “We expect small to mid-size deals to predominate in the near future, rather than the mega deals we’ve seen in the past. Europe will remain a challenging place for outsiders to make M&A deals right now, with the Ukraine-driven decline in foreign investments there. Across the board, deals will continue to be expensive, since multiples continue to be relatively high.”
This 10th edition of the Chemicals Executive M&A Report explores the various factors leading to expectations of an increase in M&A activity in the next 12 to 18 months, including growing public concern and heightened environmental awareness, stricter regulatory environments, particularly in Europe, and historic levels of dry powder held by private equity (PE) investors in the space. The 2024 Chemicals Executive M&A Report offers recommendations for chemicals companies as well as a forecast for likely deal activity.
The report looks at the various factors contributing to an expected rebound in M&A activity in the chemicals sector after a five-year downward trajectory, including:
Strong optimism (51%) among executives that M&A activity will increaseChemicals companies standing at or below 5-year historic valuationsNew opportunities created by major chemicals players’ plans to restructure in coming months Analysis of last year’s top deals, driven by consolidation, scale, and vertical integrationFundamental shifts in the industry, such as:Sustainability-related pressure from government policies and shareholdersExpansion of new sustainable, carbon footprint-reducing productsShift to innovative, customer-facing models in recycling, renewables, and specialtyRegulations and growing demand for sustainable products as significant deal driver
“For M&A in the chemicals space, it’s been a year of comeback from geopolitical pressures, high interest rates, and the resulting hold on many companies’ decarbonization plans,” said Kearney partner and report-co-author Sudeep Maheshwari. “Decarbonization goals should reappear strongly in the coming year. Chemical executives we spoke with expect strategic investors such as national oil companies (NOCs) to move faster in deal-making than PE investors, with high interest rates precipitating an increase in divestments and asset carve-outs.”
Please follow this link for the full 2024 Chemicals Executive M&A Report
About the 2024 Chemicals Executive M&A Report
Now in its 10th edition, the 2024 Chemicals Executive M&A Report has been issued annually since 2014. For this 2024 edition, Kearney interviewed 100+ leaders in the chemicals industry in H2 2023. Analysis of additional research, carve-outs, and restructures led to proprietary advisory and forecasting on M&A deal flows in the industry.
About Kearney
Kearney is a leading global management consulting firm. For nearly 100 years, we have been a trusted advisor to C-suites, government bodies, and nonprofit organizations. Our people make us who we are. Driven to be the difference between a big idea and making it happen, we work alongside our clients to regenerate their businesses to create a future that works for everyone. To learn more about Kearney, please visit www.kearney.com.
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SOURCE Kearney
