Despite ongoing global trade tensions and current economic uncertainty, fundamentals for M&A activity in the chemical industry remain strong according to Deloitte’s new report, “2020 Global chemical industry mergers and acquisitions outlook: Clearing the hurdles.” The new report explores the trends that will impact global chemical M&A activities in 2020 and provides a sector and region-by-region breakdown of 2019 deal activity.
Key takeaways from the report, according to Deloitte, include:
- The trend of traditional oil and gas companies and state-owned enterprises moving downstream into petrochemicals could drive further M&A activity as petrochemical companies look to shed disadvantaged assets.
- Sustainability concerns are changing chemical companies’ business models and will lead to more non-traditional M&A activity in the form of new alliances and ecosystems that will drive innovation and secure the recycled material supply and related infrastructure.
- Private equity groups are likely to continue to play a critical role in chemicals M&A—providing capital, acquiring non-core or non- performing assets, and building companies through consolidation that will subsequently be sold to corporate acquirers.
M&A activity trends in each chemical sector in 2020 reportedly include:
- Commodity chemical companies will likely spend much of 2020 focused on driving efficiencies rather than using M&A to add to capacity.
- Activity in specialty chemicals sector will continue be driven by acquisitions of products being carved out of larger companies as they look to optimize their portfolios.
- Trade disputes and weak agricultural commodity prices will continue to impact deal activity in the fertilizer and agricultural chemicals sector.
The Outlook includes regional M&A breakdowns for the U.S., China, UK, Germany, India, Netherlands, Japan and Brazil.
For more information, visit: www.deloitte.com
