Wedoany.com Report on Feb 26th, A recent report from the international investment bank Young&Partners indicates that the chemical mergers and acquisitions (M&A) market showed signs of increased activity by the end of 2025, with industry valuations stabilizing. It is projected to achieve a moderate recovery in 2026. Sustainability remains a focal point for the industry, and market attention to new fundamental chemical technologies continues to grow.
The report points out that the trajectory of the chemical M&A market is closely linked to the global economy and industry environment. The current global economic landscape is fragmented, with economic weakness in some regions. Measures such as the U.S. imposition of tariffs have heightened uncertainty. Although the U.S. economy remains relatively stable, it has shown signs of moderate slowing. The unclear global economic outlook, geopolitical tensions, high interest rate environments, and frequent policy adjustments in the U.S. collectively contribute to a high degree of market uncertainty. Economists from the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the World Bank have all stated that trade wars will have a significant negative impact on the global economy. The prosperity of the chemical industry is tied to global economic growth and raw material costs, both of which currently constrain corporate revenues and profits.
The industry also faces challenges such as slowing demand in specific segments, volatility in oil and gas prices, and capacity expansion. European chemical companies are in a difficult position, with weak demand and high costs squeezing profits. Global commodity chemical production is experiencing cyclical downward pressure, compounded by the impact of new capacity additions in Asia and the Middle East, highlighting operational difficulties. Capacity expansion in the Middle East aims to promote economic diversification rather than being based on cyclical demand growth.
Affected by this, the chemical M&A market remained sluggish through the first three quarters of 2025. Data shows that the total transaction value for the first three quarters was $32.5 billion, which annualizes to $43.3 billion, slightly lower than the $45.3 billion for the full year 2024. In terms of transaction volume, 45 deals were completed in the first three quarters, annualizing to 60 deals. Although this is slightly higher than the 50 deals in 2024, it is significantly lower than the 75 deals in 2023 and 86 deals in 2022.
Despite cases in 2025 such as The Carlyle Group and Qatar Investment Authority acquiring BASF's coatings business, and Berkshire Hathaway's all-cash $9.7 billion acquisition of OxyChem, such transactions are not the mainstream. As of the end of September 2025, a total of 20 announced but not yet completed transactions, with a total value of $27 billion, indicate that the pace of subsequent M&A activity will remain relatively slow.
From a segment perspective, the chemical M&A market shows a divergent trend. M&A activity in commodity chemicals continues to decline, with transactions in the first three quarters of 2025 accounting for only 35.6% of the total, below the historical average of approximately 50%. M&A in specialty chemicals remains relatively stable, with valuations rising moderately, reflecting the preference of strategic buyers and a more favorable operating environment.
In terms of regional distribution, the chemical M&A market is dominated by Asia and other regions, followed by the United States, with Europe at the bottom. European chemical companies are affected by high energy costs, strict regulations, and low growth, resulting in ample supply from sellers but low buyer interest. Asset divestitures may end in plant closures. Business spin-offs by companies such as DuPont and Honeywell did not involve a change of control and therefore do not constitute true M&A; their value creation remains to be observed.
Looking ahead to 2026, the chemical M&A market is expected to improve moderately, but constraints remain. There is ample supply of assets from sellers, but the number of buyers is limited, making large-scale transactions difficult to scale up. Weakness in commodity chemicals and M&A in Europe will hinder the recovery. Market recovery depends on reduced economic and geopolitical uncertainty, lower interest rates, and improved global economic stability. Whether these conditions will be met remains uncertain. It is anticipated that chemical M&A activity in 2026 will focus on non-core business divestitures, transactions driven by corporate strategic transformation, and private equity asset exits. Strategic buyers will remain cautious, while private equity firms, under pressure to deploy capital, will continue to invest unallocated funds. Overall, factors suppressing the market are unlikely to dissipate in the short term, and the momentum for recovery will not significantly strengthen.
