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14
2023
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08
Global Chemical Industry M&A Outlook in 2023
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M&A activity in the global chemical industry will be weak in 2022
M&A activity in the chemical industry started 2022 with an optimistic outlook for continuing the strong momentum of the previous year, with 158 deals in the first quarter. However, many unfavorable factors such as geopolitical tensions in Europe, fluctuations in energy prices, tightening credit markets, and declining market demand in 2022 will have a major impact on the global chemical industry, and many chemical companies will focus on responding to demand fluctuations and continued supply in 2022 Chain disruption, while controlling costs, and a more cautious attitude towards mergers and acquisitions led to a 21% decline in global mergers and acquisitions transaction volume that year after hitting a 10-year high in 2021.
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Global Chemical Industry M&A Outlook in 2023
In 2023, the chemical industry may focus on small strategic acquisitions and divestitures
In January 2023, Deloitte conducted a survey of 54 chemical company executives from different sub-sectors and regions to understand and evaluate their M&A plans for the coming year. The results showed that 90% of the surveyed chemical company executives were still optimistic They strongly believe that M&A activity is at least likely in 2023, with less focus on large transformational acquisitions, while small strategic acquisitions remain a focus for chemical companies.
At the same time, compared with last year, the optimism of the interviewees on asset divestitures has increased slightly this year. The continued unfavorable economic environment and the declining financial performance of the chemical industry may make some chemical companies turn to asset divestitures in order to continue investing in growth. , more profitable business to provide funds.
ESG maintains momentum
While many companies have not made ESG issues a near-term focus, there will still be a significant number of ESG-driven M&A transactions in the chemical industry in 2022. We may see increased focus on such investments in the second half of 2023 and 2024 as companies work through their near-term liquidity and profitability issues.
Optimistic prospects for mergers and acquisitions in the chemical industry
Although still facing some uncertainties and headwinds, there are signs that the outlook for the chemical industry is promising. For example, the reopening after the epidemic will help alleviate some of the supply chain problems faced by the chemical industry and promote economic growth, which in turn will increase the demand for various chemical products and materials. Even if there is a recession in the future, chemical companies will often emerge from the recession first, considering that chemical products are the basis of many other downstream products.
Wang Xi, Deloitte China Energy and Chemicals Industry Financial Advisory Leader, pointed out: "In 2023, chemical companies will continue to respond to current challenges while focusing on long-term sustainable growth. For this, M&A transactions will inevitably become a reality. Key strategy for the target. We believe 2023 will be the year that chemical M&A deals regain momentum.”
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