Solenis-Diversey deal highlights trend for strategic, sustainability-focused acquisitions

Solenis, a specialty chemicals company serving water-intensive industries, wrapped up its $4.6 billion acquisition of Diversey Holdings, Ltd., a supplier of hygiene, infection prevention, and cleaning products to global pharmaceutical companies.

This acquisition comes amid a trend of smaller, more strategic M&A activity in the pharma sector during the second quarter of 2023. While the Solenis-Diversey deal bucks this trend in terms of deal size, it aligns with the strategic nature of recent acquisitions in the industry.

The merger creates a global firm specializing in integrated water and hygiene that operates in more than 130 countries with 71 sites and 15,000 employees. 

Before the acquisition, Solenis already served a diverse number of industrial sectors, including pulp, paper, oil and gas, chemical processing, mining, biorefining, power and municipal markets. 

Solenis-Diversey deal could be harbinger of more chemicals sector M&A deals

The acquisition aligns with a broader trend in the chemicals sector. Despite experiencing a surge in M&A activity in 2021, the sector saw a 21% drop in mergers and acquisitions in 2022, according to Deloitte. This downturn followed a high of 158 deals in the first quarter, marking a decrease from a 10-year peak in 2021. However, the future appears optimistic. Deloitte reported that 90% of chemical executives anticipate pursuing M&A in 2023. This demonstrates resilience and strategic focus amid global economic challenges.

Driving factors

The deal aligns with several factors driving M&A in the chemicals sector, including attractive valuations, abundant access to capital and the pursuit of strategic acquisitions to build market presence and competitiveness. 

Sustainability considerations

Notably, the Solenis-Diversey deal underscores the pursuit of sustainable technologies, a driver in the chemicals sector’s M&A market. With an emphasis on water and hygiene solutions, this merger reflects the increasing importance of sustainability and operational efficiency within the chemicals and pharmaceutical industries.

Looking ahead

PwC projects that the chemicals M&A market will maintain its momentum in the second half of 2023. Factors that could drive the trend include continued demand for transformative deals, cross-border collaborations and the pursuit of sustainable technologies to address environmental challenges.