The global chemical M&A market faces a tough road ahead

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　　At the beginning of 2026, the chemical M&A market was generally permeated with a cautiously optimistic atmosphere. Corporate executives are trying to maintain a stable pace of operations amid trade tensions and ongoing geopolitical instability, while the financing market has shown some signs of easing. However, the outbreak of the Middle East conflict completely disrupted the recovery process of industry mergers and acquisitions. Geographically speaking, North American chemical assets are favored by capital due to their distance from conflict zones ； However, in a complex market environment, the content and forms of market transactions are becoming increasingly complex as well. Overall, the chemical M&A market is still a long way from returning to normal. 　　The M&A market gradually recovered in 2025. Initially, the chemical M&A market came to a standstill in 2025 due to the impact of the “Liberation Day” tariff policy introduced by the *** government last April; however, it subsequently began to recover. Data provided by Chemical Week USA shows that throughout 2025, a total of 259 mergers and acquisitions were announced, with the overall transaction value reaching $99.9 billion ； There was a slight increase compared to 2024, with 254 transactions and a transaction value of $79.4 billion. Looking at the trends, there is a clear sign of recovery in the industry; 73 M&A deals were recorded in the fourth quarter of 2025, far higher than the 52 deals in the same period of 2024 ； Two major deals worth tens of billions of dollars were finalized: Berkshire Hathaway acquired OxyChem, a subsidiary of Western Petroleum, for 9.7 billion dollars, while AkzoNobel and Axalta reached a merger agreement worth 25 billion dollars. 　　Multiple private equity firms are also accelerating the revitalization of existing assets. Throughout 2025, private equity firms participated as sellers in 15 M&A deals, a significant increase compared to previous years. 　　Federico Menella, Managing Director at investment bank DC Advisory, said that the revival in chemical sector M&A activities by the end of 2025 was driven primarily by portfolio restructuring due to operational pressures within the industry, as well as an increase in private equity investment activity. This laid the foundation for a positive start to the market in 2026, with that year potentially seeing a period of steady growth in M&A activities in this sector. 　　The Middle East conflict brings new uncertainties. The outbreak of hostilities in the Middle East has introduced further uncertainty to the already volatile mergers and acquisitions market in the chemical industry. Gary Denning, vice president at investment bank Raymond James, said that tariff barriers have gradually become the norm in this industry, while geopolitical conflicts introduce additional variables that companies cannot control. Uncertainty has always been the biggest obstacle to M&A transactions. Several bankers and M&A advisors revealed that a large number of M&A deals have been forced to be put on hold, with the extent of this suspension varying depending on the industry chain and region. In industries such as methanol and xylene that are closely tied to the Middle Eastern supply chain, M&A activities have come to a standstill, while cross-regional asset transfers are subject to stricter scrutiny. 　　Geopolitical conflicts are also reshaping the value of regional assets, with chemical assets in North America, particularly in the United States, becoming significantly more attractive. Chemical assets supporting the aerospace and defense industries, as well as corporate assets focused on the North American market, are highly favored by capital. Industry insiders draw an analogy between the impact of the Middle East conflict and previous large-scale U.S. tariff policies; after a brief market pause, the market will enter a recalibration phase. The industry is currently in a period of risk assessment and restructuring of its landscape; both buyers and sellers are reluctant to engage in asset valuation and transaction negotiations amid uncertain prospects. The North American chemical market has been relatively less affected by geopolitical conflicts, exhibiting greater market resilience ； The conflicts in the Middle East have led to an earlier bottoming out and subsequent recovery in profits for companies that produce ethylene derivatives such as polyethylene; several investment banks have raised their profit forecasts and target stock prices for American companies like Dow, LyondellBasell, and Westlake Chemical ； The reshaping of the international ethylene cost landscape has once again highlighted the cost advantages of ethane as a raw material in the United States, which had remained unremarkable for many years. 　　However, the North American market hasn’t been completely immune to these effects either. Many companies rely on Asian suppliers for raw materials; any shortage of such materials in Asia will be transmitted to North America through the supply chain, triggering a domino effect. Nevertheless, a well-developed local supply chain still provides North American firms with competitive advantages in terms of logistics, energy, and costs. 　　The structure of asset transactions is becoming increasingly complex. The complexity of transaction structures is a common trend in global chemical industry mergers and acquisitions. In recent years, the timeline for closing M&A deals has lengthened, and the range of parties involved in transactions has become increasingly diverse. Innovative transaction structures such as profit-sharing arrangements, equity retention mechanisms, and private equity continuation funds have emerged in abundance. When divesting their coating and catalyst businesses, both BASF and Yabao retained minority stakes, with the operations controlled by private equity firms ； Specialized investment firms such as Aquita and Moutares, as well as infrastructure investment platforms like Stone-peak Partners, have also entered the field of chemical asset acquisition across different sectors. 　　As market volatility increases, capital is tightening its criteria for evaluating M&A targets. High-quality and scarce assets continue to command high valuations, while companies of average quality also see active trading. However, both buyers and sellers have become more rational in their valuation expectations. In the post-pandemic era, prices of chemical products have been subject to significant fluctuations. Capital providers no longer focus solely on short-term price hike profits; instead, they pay greater attention to long-term indicators reflecting a company’s fundamentals, such as production capacity, sales volume, and product mix. 　　Assets in niche segments such as personal care, fragrances and flavors, and adhesives continue to be highly sought after by capital ； Chemicals for cleaning and disinfection are considered essential consumer goods; the North American market has a well-developed infrastructure, strong demand for such products, and sustained high levels of investment interest ； Water treatment chemicals and electronic chemicals are seizing development opportunities amid the surge in the artificial intelligence industry. Recently, Ecolab announced that it would acquire CoolIT, a liquid cooling technology company, for $4.75 billion, thereby entering the AI data center cooling market. The valuation of this transaction fully reflects the market value derived from the cross-industry integration of high-end fine chemicals and AI.