Chemical industry mergers and acquisition (M&A) activity remains uneven and concentrated in some large deals rather than a broader recovery, according to an analysis by consultant PwC.
M&A deal value stood at $67bn on a trailing twelve-month basis up to Q1 2026, it says, with 552 deals, although eleven deals of over $1bn accounted for roughly 70% of that total.
“That concentration underscores a selective market in which capital is available for scaled, strategic assets, while smaller or commodity-exposed businesses face deeper underwriting and longer processes,” PwC’s Chemicals: US Deals 2026 midyear outlook says.
The consultant says the sharpest divide is between specialty and commodity chemicals. Businesses in coatings, advanced materials, nutrition, water, and other 'defensible end markets' can still attract premium multiples, particularly when they bring 'technology, customer intimacy, or formulation know-how,' PwC says. But it adds 'commodity-exposed assets', especially in Europe, are facing pressure from higher energy costs, regulatory complexity, weak downstream demand and Chinese capacity additions.
Trends driving chemicals M&A over the next six months will include companies rationalising their portfolios, with carve-outs from diversified chemical companies, especially in coatings, advanced materials, nutrition, and non-core commodity assets, moving forward. 'Deals that come with clear and efficient stand-up plans, normalised earnings, and a credible value creation roadmap should draw interest; assets marketed on peak-cycle earnings may stall,' it says.
Michael Fiore, PwC’s US industrial products deals leader says that right now potential buyers are raising the bar, rather than stepping away from the market. He says that capital is still available for deals, but it is flowing to businesses that can demonstrate durable margins, competitive positioning and a credible path to value creation. 'Buyers are spending less time trying to time the cycle and more time asking which assets will outperform through it,' he told C&I, describing the current situation as a more disciplined market where quality matters more than quantity.
'Companies with differentiated specialty businesses or well-prepared carve-outs can still generate strong interest, while businesses relying on a cyclical recovery to close valuation gaps are finding the market much less forgiving,' he said. 'More broadly, companies are rethinking where they produce and invest, balancing cost with supply security, resilience and market access as they reshape their portfolios,' he added.
Over-capacity has been a challenge for some sectors of the chemical industry in recent years. But Fiore said businesses with differentiated technologies and stronger customer relationships continue to attract premium valuations, while commodity assets often 'require more creative deal structures or operational improvements to get transactions across the finish line'.
In many cases, overcapacity, primarily from China, is also prompting companies to rethink their portfolios and focus capital where they have a clearer competitive advantage, he said, noting that the next phase of chemicals M&A will be driven less by market timing and more by strategic execution. While the chemicals market is dealing with headwinds in commodity and tailwinds in specialty, there are strong signals that the positive industrial cycle will continue and possibly strengthen,” he said.
“For disciplined managers, this is a time to act. The companies that move first to simplify portfolios, prepare carve-outs and sharpen their investment thesis will be better positioned than those waiting for a broader recovery.” How buyers evaluate potential M&A opportunities is changing too, he said, with AI tools being used to assess operational performance, customer profitability and integration risks much earlier in the process.
That makes preparation a competitive advantage, he noted. 'Companies that can present clean data, normalised earnings and a credible value creation plan are going to stand out in an increasingly selective market.'
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