Chemicals M&A Outlook 2021

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Dutch Chemical M&A market remains active

2021 chemical industry mergers and acquisitions outlook

Despite the challenging macroeconomic environment due to COVID-19, chemicals mergers and acquisitions (M&A) activity in the Netherlands remained fairly active in 2020. Sustainability-driven M&A transations continued to grow, as ESG factors are impacting the M&A agenda more and more often.

Global Chemical Industry M&A Outlook

Despite the challenging macroeconomic environment due to COVID-19, chemicals M&A activity in the Netherlands remained fairly active in 2020. The number of deals increased from 9 to 13 with most of the transactions either plastics- or paints-and-coatings-related. The largest transaction of 2020 was Covestro’s acquisition of DSM’s Resins & Functional Materials business for almost US$2 billion. This was also one of the largest transactions globally.

The rollout of the vaccine, an expected ease of global trade tensions, and continued low interest rates provide confidence and are expected to support continued M&A activity in the Netherlands. During 2020, more resilient companies were already active in seizing the opportunity, but it is expected that a broader group of chemical companies will seize the momentum. This group will restructuring their non-core assets and revisit deals put on pause. In addition, private equity firms will sell businesses they have owned for more than four or five years.

In our 2020 Outlook, we anticipated a trend in sustainability becoming a bigger part of the chemical industry’s focus. Sustainability-driven transactions continued to grow throughout 2020, both in terms of traditional M&A transactions and nontraditional transactions such as partnerships, alliances, and new ecosystems. Environmental, Social and Governance (ESG) factors are thus impacting the M&A agenda more and more often, and it’s no different for Netherlands-based companies. A recent example is LyondellBasell and Suez’s announcement of their joint acquisition of Belgium-based mechanical plastics recycling company Tivaco. It is expected that this sustainability trend will accelerate even further in the future.

Taking all of this into consideration, an active chemical M&A market is expected in the year to come.

2021 Global Chemical Industry M&A Outlook

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