2025 has marked a notable phase of transition for mergers and acquisitions (M&A) in the global chemical industry. After a few subdued years, driven by macroeconomic uncertainties such as inflation, interest rate hikes, and geopolitical tensions, 2025 saw a selective revival of dealmaking. This revival is primarily driven by companies' ambitions for strategic growth and portfolio realignment.

Notable transactions announced this year include Borouge's acquisition of NOVA Chemicals for US$13.4 billion, ADNOC's €14.7 billion purchase of Covestro, Honeywell's US$2.4 billion purchase of Johnson Matthey's catalyst technologies, and LyondellBasell's divestment of select assets to AEQUITA. Furthermore, several high-profile deals have been announced in the last month including Carlyle's €7.7 billion acquisition of BASF's coatings business (60% stake) and Berkshire Hathaway's US$9.7 billion deal to acquire OxyChem.

Despite the commodity nature of some the larger deals, overall activity is predominantly targeting speciality chemicals, technology platforms, and sustainability-focused businesses. These account for approximately two-thirds of all chemical deals over the past 18 months and illustrate the ongoing strategic pivot away from commodity segments towards innvoation, circular economy alignment, and advanced materials. Conversely, commodity-type chemical assets have become less appealing to buyers given the current phase of the business cycle, compounded by a slow recovery outlook market by persistent oversupply and prolonged margin compression. Nonetheless, this sentiment cold shift as opportunistic investors re-evaluate risk-reward dynamics of ultra-low-cost assets.

As we look ahead to 2026, several important trends and challenges will shape the trajectory of M&A in the chemicals sector.

1. Increased Buying Interest and Deal Momentum

   According to various M&A outlooks, corporate and PE deal volume in chemicals is expected to continue growing in 2026, following a 10% rise in 2025. PE deal activity is projected to increase further, reflecting their renewed appetite for high-potential assets, especially in speciality and sustainable chemicals. Companies are shifting from recovery mode to pursuing transformational growth.

2. Regional Focus: North America, Asia Pacific, and Europe

   North America remains a dominant hub due to its technological leadership and energy cost advantages, fuelling deals in advanced materials and commodities. Asia Pacific, especially Southeast Asia and Korea, is gaining traction as an M&A hotspot for speciality chemicals and infrastructure assets, driven by further regional consolidation opportunities. Europe will see continued activity in speciality chemicals but with greater regulatory scrutiny and emphasis on ESG-aligned deals.

3. Challenges and Constraints

   Several challenges persist for chemical dealmaking. A widening valuation gap often slows deals, especially for complex, integrated petrochemical assets where buyers seek price corrections amid market uncertainties. Overhangs like environmental liabilities, legacy operational risks, and uncertain trade policies inhibit some sellers from entering the market. Financing costs and geopolitical risks are also forecast to weigh heavily on deal timing.

4. Sellers and Buyers: Strategic and Financial Players

   Strategic buyers—comprising leading global chemical corporations and prominent regional players—are anticipated to continue as the primary acquirers in the market. Their acquisition strategies are driven by objectives to diversify portfolios, gain access to new technologies and markets, and realise operational synergies. On the other side, sellers include incumbent portfolio managers keen on divesting non-core or underperforming assets to fund the current strategic focus. PE firms are re-engaging, bringing capital and operational expertise to scale mid-sized speciality chemicals businesses and technology innovators.

5. External Factors Supporting Deals

   Stabilisation in monetary policy, clearer regulatory environments, and improved access to financing will underpin M&A growth in 2026. Moreover, resolving trade disputes, advancing sustainability regulations, and incentivising green technologies will create new deal catalysts.

Outlook: cautious growth ahead

The chemical M&A landscape is poised for cautious growth, driven by strategic portfolio reshaping, technology adoption, and renewed financial backing. Though challenges remain—valuation gaps, geopolitical risks, and sector-specific complexities—the improving macroeconomic outlook and continuing need for innovation and sustainability will support deal activity in 2026 and beyond. However, the pace and scale of deals have largely depended on financing conditions, regulatory clarity, and corporate confidence. Dealmakers who couple strategic vision with financial discipline and agility will likely lead the next wave of transformative chemical industry transactions.

Find out more

Wood Mackenzie is a leading provider of transaction support services to the energy, chemicals and wider resources sector. Fill in the form above to find out how our Consulting team can help you and your organisation.