The Next Phase - Restructuring
A higher likelihood of undertaking M&A in 2025
From insightful webinars to thought-provoking podcasts, there's a buzz in the air about an upcoming surge in Merger and Acquisition (M&A) activity within the chemical industry. Several factors are creating the perfect environment for these deals to thrive: 📉 Stalling Growth and Innovation 🏭 Capacity Additions📜 Changing Regulatory Environment.
These factors combined create the ideal conditions for consolidations that drive returns. The stage is set, and the chemical industry is ready for a transformative period ahead.
Prepare for structural shifts in select chains
Market environments such as the current one often act as a catalyst for waves of consolidation, creating opportunities for companies with complementary capabilities to drive joint value creation. The chemical industry has historically seen large-scale M&A transactions deliver outsized returns, proving that strategic realignment can unlock significant competitive advantages.
Given the erosion of key value pools, intensifying competition, and evolving customer demands, industry consolidation appears to be an increasingly plausible outcome, particularly within select value chains. When traditional growth levers falter, integration across businesses can serve as a mechanism for efficiency, scale, and innovation.
As companies reassess their positioning, the industry may witness a series of strategic moves designed to reinforce leadership, optimize portfolios, and capitalize on shifting market dynamics.
“Merger and acquisition (M&A) activity in the global chemicals industry is usually high. However, recent years have seen a notable decline in the number of M&A transactions. In 2023, there were 971 announced deals, down from 977 the previous year. This continues a downward trend from 2021, which saw 1,251 M&A deals. Throughout this period the industry has faced challenges such as elevated interest rates, restrictive credit markets, and dampened revenue and earnings performance, impacting M&A activity. Despite this, chemical executives remain optimistic, with 86 percent of respondents in a recent survey of chemical industry executives expressing a likelihood of undertaking M&A in 2024. ”
Market implications and competitive landscape
With consolidation accelerating across the chemical industry, competitors will likely respond with similar portfolio adjustments. Capacity additions and a shifting regulatory landscape may encourage other players to pursue strategic acquisitions or divestment’s to optimize efficiencies and maintain market relevance. The transaction could also reshape supply chains, impacting customers and downstream industries reliant on stable production.
European chemical industry is actively shifting away from a commodity-focused approach and towards specialties, circular solutions, and renewable resources. European chemical companies are increasingly concentrating on producing specialized chemicals with higher value-added and are also developing customer co-creation strategies to become solution providers rather than just commodity suppliers.
In conclusion, the European chemical industry is actively embracing a more sustainable and innovation-driven approach, focusing on specialties, circular solutions, renewable resources, and digitalization. While significant challenges remain, the industry is working to transform its value chains and secure its future in a changing world
