Rising Mergers and Acquisitions Trend in the Chemicals Sector by Kearney

Kearney's Insightful Study on Chemical M&A Trends

Kearney has once again shed light on the world of mergers and acquisitions (M&A) in the chemicals sector with its latest report, indicating a robust trend towards increased M&A activity in 2025. This annual study, conducted among chemical executives, illustrates a notable shift in investor sentiment, with over 60% of respondents expressing optimism about potential growth in M&A. This marks a significant turnaround following a challenging period for the industry.

The study, completed in May 2025, highlights an industry adjusting to geopolitical instability, tariff changes, and evolving market conditions. As firms focus on strengthening their supply chains, M&A is viewed as a strategic pathway to achieving resilience. Given the implications of tariffs and trade uncertainties, executives are increasingly turning to M&A as a means to consolidate operations and leverage cost synergies.

Key Findings from the Kearney Study

The findings of Kearney's study reveal that regions such as Europe and Asia Pacific are notably leading this M&A trend, with around 80% of executives in these regions considering strategic acquisitions to enhance their portfolios. North America follows closely, with approximately 70% of executives actively reshaping their strategies towards consolidation through M&A.

Interestingly, the report notes that more than 55% of survey participants intend to use current market volatility to strengthen their portfolios through M&A rather than focusing solely on research and development or organic growth. This inclination underscores a shift in strategy, where navigating market fluctuations is becoming essential for sustained growth.

In 2024, the chemicals sector in the United States experienced a resurgence in M&A activity, exceeding $42 billion, the highest since 2019. The increasing deal flow can particularly be attributed to heightened economic growth in the U.S., which eclipses that of other mature economies. Additionally, international firms are acquiring American assets more frequently, while domestic companies are reshoring operations, responding to global supply chain dynamics.

However, not all regions are witnessing positive trends. The report also highlights a 27% year-over-year decline in Chinese corporate M&A activity in 2024, with total transactions falling to $8.8 billion. This represents a decade low. Despite this downturn, expectations for local consolidation in Asia regarding agrochemicals and intermediates are on the rise.

Financial investors are particularly active in the M&A space, with transaction volumes reaching the highest levels seen in over a decade at $13.7 billion. In Europe, financial sponsor activity grew to $4.1 billion in 2024, a growth trajectory anticipated to continue into 2025.

Challenges Ahead

Despite the compelling trends towards increased M&A activity, the chemicals sector faces significant challenges. A staggering 90% of North American executives cited unfavorable or ambiguous deal valuations as a primary deterrent, complicating their ability to forecast reliable returns. There remains a notable misalignment in valuation expectations within the industry, further complicated by the high exit multiples that linger from the previous COVID-19 pandemic highs.

Nevertheless, Kearney's analysis points towards promising investment opportunities amidst these challenges, including the potential for carve-out deals involving assets from chemical producers and buyouts targeting high-growth specialty chemicals.

Conclusion

The 2025 Chemicals Executive M&A Report marks the 11th edition of Kearney's annual analysis, offering keen insights into the evolving landscape of the chemicals industry. With a decade-long legacy, Kearney emphasizes the importance of strategic management and adaptability within the sector amidst turbulent market conditions. As the atmosphere surrounding M&A becomes more complex and nuanced, Kearney's work continues to be a crucial resource for industry participants seeking to navigate these trends successfully.

For further details and to access the full report, visit Kearney's official website.