Report: Increase in mergers and acquisitions in the chemical industry

Kearney’s recent annual survey of chemicals industry executives has unearthed an intriguing potential uptick in mergers and acquisitions (M&A) activity in the year 2025. The survey, conducted in May, reveals a notable surge in optimism, with over 60% of leaders worldwide expressing confidence in the anticipated growth of M&A activities—a significant uptick compared to the previous year. This newfound optimism comes on the heels of several challenging years for the industry, marked by geopolitical upheavals, trade uncertainties, and tariff impositions that have set the industry abuzz.

According to the latest findings by Kearney, a prominent management consulting firm, a staggering 80% of executives in Europe and Asia Pacific, along with around 70% in North America, are contemplating portfolio restructuring and consolidation through M&A as a means to capitalize on cost synergies. Over 55% of respondents indicated their plans to leverage market volatility to bolster the resilience of their portfolios through M&A transactions instead of investing in research and development or organic growth strategies.

On the M&A front, both North America and Europe witnessed a surge in deal-making activities in 2024. Notably, corporate M&A in the United States spiked to $42 billion in the said year, marking its highest level since 2019. The robust economic growth in the U.S., outstripping that of other established economies, has prompted Asian and European firms to snap up American assets, while domestic players are increasingly opting to reshore their operations.

Contrary to global trends, Chinese corporate M&A experienced a 27% dip in 2024, totaling a modest $8.8 billion, marking its lowest figures in over a decade. Nonetheless, the local consolidation momentum in Asia, particularly in the agrochemicals and intermediates sectors spanning China, India, and Southeast Asia, is set to intensify in the coming years. Concurrently, M&A transactions by financial investors soared to a whopping $13.7 billion, registering their highest levels in more than ten years.

In Europe, financial sponsor M&A activities surged to $4.1 billion in 2024, showcasing a growth trajectory likely to extend into 2025. Across the Middle East, sovereign wealth funds and state-backed enterprises are increasingly acquiring assets globally, focusing notably on specialty assets in Europe and Asia. Moreover, corporate investors are displaying a keen interest in forging joint ventures within the fertilizer and petrochemical domains.

In light of these developments, Andrea Menegazzo, a partner at Kearney and co-author of the report, expressed his observations, stating, “Momentum is gaining in the chemicals M&A landscape, with industry stakeholders actively managing longstanding challenges such as tariffs, supply chain discrepancies, and limited financial resources.” He went on to highlight the prevalent aura of cautious optimism that pervades the industry, predicting an upswing in deal-making activities as strategic investors recalibrate their portfolios, while financial sponsors proactively scout for investment opportunities.

The stage is set for exciting times in the chemicals industry, as executives navigate this transformative landscape with a carefully calibrated game plan focusing on M&A strategies to optimize growth prospects and unlock new avenues of sustainable business development.