Chemical industry outlook

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2024 global chemical industry mergers and acquisitions outlook

Resilience through the headwinds

In 2023, the chemical industry faced continued economic challenges, leading to a noticeable decline in mergers and acquisitions (M&A) transactions—the lowest in a decade. Although interest rates largely stabilized throughout 2023, they remain elevated, keeping the cost of deal financing high and putting pressure on M&A activity. Despite these headwinds, there’s optimism that resilience and adaptation may foster a stronger performance in 2024.

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Taking stock of the evolving chemical industry M&A landscape

As our outlook from 2023 indicated, the year commenced with significant challenges for the industry. These headwinds led to a 16% decrease in global chemicals M&A transactions from 2022, marking the lowest level in a decade. The decline was even more pronounced when compared to the pre-COVID-19 five-year average (2015–2019), with a 26% drop in chemicals M&A volumes.

Despite the sluggish M&A activity in 2023, it’s important to note that these trends mirrored the broader global M&A markets, reflecting the impact of wider economic and geopolitical conditions. Interest rates largely stabilized in 2023, with major central banks, including the US Federal Reserve and the European Central Bank, easing up on their rate hikes as inflation pressures eased. However, elevated interest rates persisted, increasing the cost of financing deals and exerting pressure on M&A activity.

Looking for a deeper dive into what potentially lies ahead this year for chemical industry mergers and acquisitions? Download the 2024 global outlook.

2024 global chemical industry mergers and acquisitions outlook

Notable transactions in the key chemicals sectors in 2023

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Commodity chemicals

In the commodity chemicals sector INEOS was active, announcing two of the more significant acquisitions in the sector for 2023. In September, it announced the acquisition of Eastman’s Texas City site, which includes a 600kt acetic acid plant, and in December it announced the acquisition of LyondellBasell’s ethylene oxide and derivatives business and production facility at Bayport, Texas, for US$700 million.

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Specialty chemicals and materials

While M&A activity in the specialty chemicals and materials sector was still down for the year, it fared better than other sectors, decreasing 9% in the number of M&A transactions from the 2022 total and decreasing 22% compared to the pre-COVID five-year average (2015–2019). Buyers tended to stick to acquisitions where they saw sustained long-term end-market tailwinds, despite the challenging current environment. DuPont’s announcement in May of the US$1.75 billion acquisition of Spectrum Plastics Group was one example of this, with Spectrum Plastics offering “specialized materials and solutions into attractive end markets with long-term secular growth trends.”

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Fertilizers and agricultural chemicals

Despite ongoing geopolitical conflicts in Europe, demand for base agricultural fertilizers and nutrients remained steady, underpinned by relatively strong agricultural commodity prices. OCI Global (OCI) announced two significant transactions in December. The first transaction announced was with Abu Dhabi National Oil Company (ADNOC) in which ADNOC will acquire OCI’s entire majority share in Fertiglobe plc for US$3.62 billion plus an earnout mechanism. Fertiglobe plc is one of the world’s largest ammonia and nitrogen producers and exporters. OCI also entered into an agreement for the sale of its entire equity interest in Iowa Fertilizer Company LLC (IFCO) to Koch Ag & Energy Solutions (KAES) for US$3.6 billion.

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Explore the outcomes of the chemicals M&A survey

Our survey polled 49 executives at chemical companies across sectors and geographies between January 11, 2024, and January 26, 2024, to assess M&A sentiment and future M&A plans. Read a summary of the results and key insights from the survey.

Three years of historical data and perspective

A broader view can sometimes reveal deeper trends. Tap insights you may have missed from the previous three years of our global chemical industry mergers and acquisitions outlooks.

 

Resilience: A steppingstone to robust chemicals M&A activity

We are starting to see some green shoots of better days ahead, leading to some optimism. In general, we start 2024 with what appears to be a reduced M&A pipeline and appetite, and our chemicals M&A forecast remains tempered until there’s more clarity around improved financial performance in the industry.

However, despite the current cyclical downturn, the long-term outlook for chemicals remains strong. Additionally, the fundamental hypothesis that the right M&A moves by chemical companies can create outsized returns remains intact—ultimately drawing the conclusion that the rebound in chemicals M&A activity is simply a matter of when, not if.

If you’d like to talk about how your business can elevate its chemicals M&A strategy this year, let’s set up a conversation.

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