Chemicals M&A Boom? A Closer Look Reveals an Uneven Reality

CHICAGO, IL – March 04, 2026 – By Michael Bennett

On the surface, the global chemicals sector appears to be celebrating a robust comeback in dealmaking. A new report from consultancy Kearney points to an 18 percent year-over-year surge in global M&A deal value for 2025, a figure that suggests a return of confidence after several sluggish years. However, a deeper investigation reveals a far more complex and uneven reality, where headline numbers are skewed by a handful of massive deals and the true driver of activity is not ambitious growth, but strategic defense.

While the 18 percent figure paints a picture of a broad-based recovery, the Kearney report itself notes that just four mega-deals accounted for a staggering 40 percent of the total value. This concentration suggests the market's perceived strength is less a rising tide lifting all boats and more a series of waves created by a few colossal ships. In contrast, activity outside these mega-deals increased by a marginal 4 percent, indicating that the underlying pulse of the market remains much steadier, and perhaps weaker, than the top-line number implies.

"M&A deals are being used to fix chemicals portfolios under pressure rather than pursue growth in a cyclical upswing," said Andrea Menegazzo, a Kearney partner and one of the report's authors, in a statement. This sentiment captures the market's defensive posture, where companies are using acquisitions and divestitures to consolidate, streamline, and weather economic storms rather than to expand their frontiers.

A Tale of Two Markets

The narrative of a strong rebound is further complicated when placed alongside other industry analyses. While Kearney's report highlights an 18% increase in deal value, other market watchers paint a different picture for 2025. Reports from firms like Capstone Partners and Clairfield International indicated that both M&A volume and disclosed deal value in the chemicals sector actually declined year-over-year, suggesting the M&A environment remained largely subdued. Some analysts noted that any quarterly upticks were often attributable to a single large transaction, reinforcing the idea that the market's health is dependent on sporadic, large-scale events rather than consistent activity.

The specific examples of mega-deals cited as driving 2025's value also raise questions, appearing to reference historical or ongoing strategic alignments rather than a fresh slate of blockbuster 2025 acquisitions. For instance, a reported AkzoNobel–Axalta deal actually refers to a bid that was terminated in 2017. Similarly, Berkshire Hathaway's involvement with OxyChem is part of a long-term investment in the parent company, Occidental Petroleum, not a direct acquisition of the chemical subsidiary in 2025. These discrepancies suggest that the true story is one of continued, complex portfolio shuffling among major players, not necessarily a new boom in dealmaking.

The New Playbook: Tariffs and Carve-Outs

If not for growth, what is driving the M&A activity that does exist? According to Kearney, the answer lies in a new, more pragmatic playbook shaped by external pressures. A striking 76 percent of executives surveyed by the firm cited tariffs as a major headwind, forcing a fundamental rethink of strategy. This sentiment is echoed across the industry, with multiple reports confirming that trade barriers and geopolitical tensions are reshaping supply chains, increasing production costs, and prompting companies to diversify their operational footprints.

In response, companies are turning to M&A as a tool for operational and structural change. The focus has shifted to portfolio reshaping, with a marked increase in complex carve-outs and divestitures. Global corporations, particularly in Europe and North America, are shedding non-core assets to sharpen their business models and concentrate on core competencies. This trend, noted by firms like PwC and Roland Berger, is creating a pipeline of assets for both strategic buyers and private equity, but these are not simple acquisitions. They are often distressed or non-essential business units that require significant operational heavy lifting to stabilize and grow.

This strategic shift means that value creation is no longer primarily about cost synergies or financial engineering. Instead, it is about improving pricing and product mix, boosting manufacturing productivity, and optimizing everything from procurement to working capital. As Kearney's report suggests, there is no single silver bullet; success requires a multi-pronged operational approach.

A Global Divide and the Rise of New Capital

The M&A landscape also reveals a significant regional divergence. While North America and Europe are centers for the restructuring-driven deals and carve-outs that are defining the Western market, their overall dominance in deal value is debatable. Several analyses indicate that Asia, particularly through domestically led consolidation, has captured the largest share of deal volume, with nearly half of all buyers in the first half of 2025 based in the Asia-Pacific region.

Perhaps the most significant shift in capital flow is the re-emergence of sovereign-backed sources from the Middle East. According to Kearney, total M&A deal value in the region tripled from $3 billion in 2024 to $9 billion in 2025, with strategic transactions comprising 98 percent of that value. This signals renewed ambition from state-backed players to deploy capital internationally, acquiring strategic assets and positioning themselves as long-term players in the global chemicals landscape. Aligning with this patient, deep-pocketed capital is becoming a key strategic consideration for Western firms.

Private Equity Pivots to Operations

This new environment is forcing a fundamental pivot for private equity investors. The era of relying on financial leverage and multiple expansion—buying a company and selling it for a higher multiple a few years later—is fading. As Menegazzo noted, "we expect chemicals PE returns coming less from multiple expansion and more from operational upside, especially in carve-outs."

This sentiment is widely shared. With pressure mounting from limited partners to deliver returns on capital, PE firms are being forced to become expert operators. Success in today's market, particularly with complex corporate carve-outs, depends on the ability to roll up one's sleeves and execute deep operational changes. This includes everything from untangling IT systems and supply chains to implementing new efficiency programs and driving cultural change.

Looking ahead, the winners in the chemicals M&A space will not be those who simply do the most deals. Instead, they will be the disciplined operators who can manage complexity, execute flawless integrations or separations, and generate real, tangible value from the assets they acquire. As the industry navigates a landscape of tight margins, geopolitical uncertainty, and strategic realignment, the ability to execute operational change has become the most valuable currency of all.