3
Synopsis
Chemspec Europe 2025 began with a dramatic twist—the evacuation of thousands of CHEMSPEC visitors staying in hotels close to Koeln Messe due to the discovery of unexploded World War II bombs in Cologne. Despite the disruption, the trade show proceeded with remarkable precision and order. This provided a fitting preamble for the M&A CHEMSPEC panel, a timely, provocative conversation about the changing realities of the fine and speciality chemical industry in these turbulent times. Moderated by Bogdan Comanita of MarketChemica & Associates, the panel explored macroeconomic shifts, regional dynamics, and the practical implications on valuations and industry M&A transactions. What emerged was a consensus that uncertainty is here to stay. Strategy and M&A execution must place greater emphasis on long forgotten considerations in globalized economy such as the critical role of geopolitics, increasing regulatory burdens for free movement of capital, goods and services and the need for regional supply chain resilience.
Introduction
Cologne’s Koelnmesse convention center played host to the 2025 Chemspec edition unlike any other. Just before the fair opened its doors, three unexploded World War II bombs were discovered and defused in the city center, triggering the evacuation of thousands, including many Chemspec attendees staying at the hotels adjacent to the Messe. The incident felt like an eerily symbol of latent historical tensions reemerging in today’s geopolitical climate but did little to derail the event. Well organized, with characteristic German hospitality and efficiency, Chemspec 2025 pressed on successfully.
I had the pleasure to moderate the M&A panel discussion curated by Chemistry Today under the Pharma Scene series. The panel convened by design voices from across a broad range of the deal spectrum—operators, private equity, strategic advisors, and consultants spanning China, Eastern Europe, Western Europe, and North America. What they shared was a multiangle insight converging in strategic urgency: M&A in the chemical sector has entered a whole new phase defined not only by financial considerations, but also by systemic repositioning of entire global supply chains. Opportunities and threats are driven by widely gyrating geopolitical, regulatory, and technological fractures that investors and executives peering into the future struggle to anticipate in a likely unifying scenario.
Discussion
Macro Realignment: From Globalization to the Multipolar World Strategy
As panel moderator I limited my interventions to forecasts already published in various strategy articles years in Chemistry Today. My 2022 essay forecasted an irreversible global split between East and West, coining the term the “Great Decoupling”. The article put the probability of a fracture of Sino American integrated economy at 100% with the probability of direct military confrontation at 75%. The article concluded at that time, “Current developments are not taking us toward peaceful coexistence. The Great Decoupling and the potential for Sino-American trade war cannot be ignored in boardrooms anymore…. The time to act is now” (1).
Panelists agreed: the decoupling is real and well underway. Jens Hoeltje, formerly with Solvay and now senior partner at JF Chemical Associates GmbH, emphasized that raw materials supply and technology transfer—once taken for granted—must now be stress-tested for strategic autonomy. “Access to rare earths, monomers, or semiconductor-grade chemicals is now a boardroom issue,” he noted. Deals once evaluated solely on financials and synergies must now account for raw material origin, permitting structures, and regional export regimes (2).
MarketChemica experienced the effects of this policy shift firsthand. One deal—an SPA-stage transaction involving China’s third-largest player seeking a U.S. market entry—collapsed after the announcement of the so-called Liberation Day tariffs, a sweeping package of new U.S. duties aimed at reshoring strategic industries and reducing dependency on China. The Chinese government responded by restricting outbound FDI into the United States, effectively scuttling the transaction. In another case, an Indian acquirer—attracted by strong synergies with a U.S. target heavily reliant on Chinese imports—put negotiations on hold, awaiting greater clarity on the evolving U.S.-China and U.S.-India trade dynamics.
While disruptive in the short term, the Liberation Day policy also signals the beginning of a structural reindustrialization of the United States—an intentional realignment aimed at restoring domestic production capacity in critical sectors. Though costly for cross-border dealmaking today, this pivot is laying the groundwork for new manufacturing ecosystems across the West. More broadly, the shift toward a multipolar world is opening opportunities in long-underinvested industrial segments.
Radu Ciobanu, CEO and owner of CH-C, noted that Eastern Europe is emerging as a reliable fallback production hub for European buyers (3). Many Western European producers are now seeking to shorten supply chains and reduce delivery risk by contracting intermediates directly within the EU. This trend is driving increased demand for production capacity in the region—and, in turn, contributing to upward pressure on valuation multiples for capable producers located in Eastern Europe.
The emerging consensus: whether talking about vertical integration or simply a supplier-buyer relation, strategic fit must now include the threat of geopolitical insulation, and factor felt on both sides of the ocean. Defining and quantifying supply risk is a mission critical for choosing suppliers or acquisition targets and this holds true at all levels of the supply chain from basic chemicals to active ingredients and specialty chemicals. Conversely, understanding the supply risk of your customers is an essential component of the supplier’s negotiating power, an aspect that offers a more leveled playing field between large buyers and SMEs. This is ultimately expected to translate in higher valuation multiples in the mid-term future.
Regional Perspectives: Rebalancing Geopolitical Risk
One of my 2013 articles, signaled the U.S. would become the world’s largest oil and gas producer, enabling a transition from coal to gas and dramatically lowering U.S. domestic energy costs and carbon footprint (4). Fast-forward to 2024, and the unforeseen result of this observation was the replacement of the Russian gas with U.S. LNG accounting today for nearly 50% of European gas imports (5). This radical transformation, I argued, has reconfigured global commodity chemicals manufacturing competitiveness and triggered diverging industrial cost structure across the two sides of the Atlantic.
Panelists agreed on this fact but were divided on the net implications. Jens noted that while the U.S. initially appeared to be the more favorable base due to cheap energy and “safe harbor” capital markets, this picture is evolving. Uncertainty around tariffs, industrial policy, and erratic federal action in the U.S. has made Europe’s more predictable (if expensive) business environment attractive again. This is particularly true in sectors like pharmaceuticals and fine chemicals where technological sophistication by far outweighs energy cost differentials (6). This stability should favor European fine and speciality chemicals industry over the American one.
Radu Ciobanu, from an East European perspective, emphasized the region’s accelerating transformation into a premier destination for capital-intensive chemical and materials investments. He noted that the wave of FDI into Romania (7) and its neighbors is no longer driven by labor and tax cost arbitrage, but by a convergence of factors: internal EU market access, skilled technical talent, upgraded infrastructure—and, crucially, a hard security perimeter underwritten by the embedded presence of NATO forces. ‘The Americans aren’t just visiting—they’re embedding,’ Radu said. ‘With the construction of the largest U.S. military base in Europe, Poland and Romania are no longer frontier countries but a fortified anchor of the entire EU construct. This makes it in fact one of the safest industrial investment environments on the continent.’
This physical security is increasingly matched by energy security. Romania, uniquely among EU member states, is on the path to natural gas self-sufficiency through the phased development of its Black Sea reserves—further reinforcing the region’s industrial cost structure competitiveness and decoupling it from volatile global LNG pricing.
Tell-tale signs are already here. He cited ICIG’s acquisition of Clariant’s €140 million cellulosic ethanol facility in Podari, now being transformed into a fermentation-based CDMO by WeylChem, as emblematic of this shift. This is not an isolated case. Hungary has attracted recently over €2 billion in greenfield and brownfield chemical investments—including Wanhua/BorsodChem’s expansions in isocyanates and nitric acid, and MOL Group’s €1.3 billion polyol complex in Tiszaújváros. Poland continues to strengthen its agrochemical and polymer additive capacity through Synthos and PCC Rokita, while the Czech Republic is becoming a key node for custom manufacturing. ‘These are forward-leaning, strategic investments, not just opportunistic relocations,’ Radu said. ‘And they’re clearly favored by the combination of financial incentives and geopolitical stability.’
He added that the EU’s ReArm Europe initiative—through its SAFE loan mechanism and temporary fiscal flexibility—has unlocked a favorable financing window that further tilts the calculus in favor of Eastern Europe. With borrowing costs significantly lower than market rates (8), even capital-intensive defense-linked projects have become viable across the region. And they are multiplying by the day. As shown in Table 1, countries such as Hungary, Poland, Estonia, and the Czech Republic are building out energetic material capacity—including RDX, nitrocellulose, and TNT—often under public-private arrangements.
Finally, Radu noted growing interest from global capital sources looking to establish strategic industrial footholds inside EU borders. ‘We’re seeing active inbound inquiries from Israel, India, and even China. Everyone wants a bridgehead inside the Union—preferably in a location that is REACH-compliant, logistically central, and geopolitically bulletproof. Romania and Eastern Europe increasingly fits that profile.’
Regulatory and Compliance Pressures: Valuation, Carve-Outs, and CAPEX
Stefano Console, a veteran advisor with Oriento, highlighted that the European regulatory burden is increasingly becoming a valuation driver in M&A transactions. Whether you are a buyer or a seller, regulatory cost such as REACH 2.0, PFAS restrictions, and water emission standards are not just operational challenges—they are directly influencing and depressing M&A valuations.
Most buyers by now demand clarity on future CAPEX obligations while sellers command premiums for existing permitting. Sites with outdated waste treatment infrastructure or uncertain permitting status are penalized via valuation discounts and often even excluded from deals entirely. In extreme cases they are doomed to be shut down. Conversely, companies that have already modernized their compliance systems enjoy premium multiples and faster deal cycles (9).
Console added that some sellers are quietly preparing to divest assets before compliance costs spike. In some cases, these sellers may find uninformed or short-term-oriented buyers such as investors outside EU, willing to pay a premium without factoring in looming liabilities. However, more sophisticated buyers—those who can accurately forecast environmental obligations and structure remediation plans—can extract value in the negotiation process. In addition to that, if the seller places importance on legacy considerations like continued employment or site viability, a buyer’s willingness to invest in compliance and modernization may tip negotiations in their favor, even if it comes with a valuation haircut.
China, the EU, and the Fragile Middle Ground
A particularly nuanced part of the panel came from Roger Laforce, representing Dorra Europe, a Chinese-affiliated CDMO. He pointed out that the EU–China relationship remains more stable than the U.S.–China axis. Unlike the United States, which has witnessed multiple waves of decoupling—export bans, investment blacklists, and industrial reshoring—the EU continues to attract Chinese capital and remains a key market for Chinese intermediates and APIs.
This healthy capital flow is reciprocal. Laforce cited BASF’s multi-billion-euro investments in China as proof that mutual interest endures (10) and the bilateral relation between the second and the third largest economy in the world are naturally seeking a relief to isolationist pressure manifest in the U.S.
He also argued that innovation remains the ultimate differentiator transgressing cross-border asperities. From GLP-1 peptide platforms to lipid nanoparticles and mRNA and electrochemistry, he sees strong collaboration opportunities between EU and Chinese firms in high-value pharmaceutical technologies (11). By contrast to the US, the rapprochement between the Chinese and the EU markets will evolve naturally in a positive direction.
Laforce’s intervention offered a more optimistic reading of the EU–China relationship—one that sees ongoing commercial pragmatism prevailing over political headwinds. In sectors like CDMO, where innovation, speed, and cost efficiency drive decisions, Chinese firms remain highly competitive, and European buyers are still engaging.
MarketChemica experience supports this argument. We are also witnessing great interest from Chinese capital to acquire in Europe in the CDMO space. Others on the panel broadly agreed with his reading—at least for now.
The EU remains more open to Chinese investment than the U.S., and in sectors like CDMO, where speed and capability matter more than ideology, cross-border collaboration continues. While initiatives such as the International Procurement Instrument (IPI), Foreign Subsidies Regulation (FSR), and inbound investment screening may introduce some friction, they remain limited in scope and/or decentralized in enforcement. As one panelist remarked, “If there’s a will, there will be a way in the EU—for the foreseeable future.”
Uncertainty and Strategic Agility: A Closing Reflection
While there was healthy disagreement on which regions and strategies offer the best prospects, there was near-universal agreement on one point: uncertainty will not recede any time soon. Whether due to geopolitics, climate disruption, supply shocks, or regulatory overhauls, volatility is the new baseline.
Hoeltje framed it as a managerial imperative: “You can’t rely on long-established rules.
Even friend-shoring might not be enough. Strategic risk management now trumps pure economic optimization.”
Console echoed this with cautious optimism: “Hope is not a strategy. But smart investors are still moving, innovating, and finding value in transition.”
Conclusions
The Chemspec Europe 2025 M&A panel did not just track trends—it laid bare a new operating environment. The global chemical industry is undergoing a permanent shift, and new tectonic trenches are being formed as we speak. M&A is no longer only a numbers game; it’s a strategic chessboard shaped by geopolitics, regulation, capital scarcity, and industrial policy.
The rules have changed. Ignoring them and hoping for a reset to the old, globalized economy is no longer an option.
Geography now dictates value. Not all sites are equal. Proximity to markets, embedded security guarantees between countries, and regulatory predictability now define investment platform risk.
Resilience trumps optimization. The cost arbitrage game is over — buyers must assess location not just by cost, but mainly by survivability in a fragmented world. The cheapest supplier or site on paper may be the first to collapse in a crisis. Supply chain redundancy, raw material traceability, and permitting resilience are now core components of valuation—not afterthoughts.
China and the EU may still coexist — but neutrality is under pressure. Companies trying to hedge both East and West are running out of room. Boardrooms must pick a lane or diversify while the window of opportunity is still open on China – EU axis. China US axis is already closed and this bodes for friction in the EU’s future as well. In sectors like CDMO and specialty APIs, deal (and company) structures must reflect the emerging bifurcation.
Eastern Europe is the new industrial frontier—for those who understand it. It’s not about cheap labor. It’s ultimately about being inside the EU, and inside NATO with heavy boot-on-the-ground military commitment from the US. The region now offers a rare combination: geopolitical insulation and high-value manufacturing readiness.
Regulatory preparedness is non-negotiable. Future CAPEX and environmental liabilities are becoming the single biggest drag on deal value in the EU. Sellers who don’t quantify compliance readiness will leave money on the table—or see no buyers at all.
For executives and investors in the chemical space, the message is unambiguous:
Playing by the old rules will not just cap upside—it will expose downside.
Strategic fit must now incorporate hard questions:
Can this site be defended—legally, logistically, politically and even militarily?
Will future regulations render this asset obsolete or stranded?
Is the value chain exposed to systemic shocks no longer considered tail risk?
Those who ask and answer these questions with clarity will secure not just good deals—but enduring ones. Everyone else will be reacting to yesterday’s world.
References and notes
- Note: All panel member’s statements were fact-checked and we provide the references below as a curtesy to the reader interested in learning more.
- Comanita B., Gommers P. Reflections on War and Peace (1): A Scenario for a Multipolar World Order. Chemistry Today, 2023, 41(1):60–63.
- European Commission. Critical Raw Materials Act. COM/2023/160 final.
- UNCTAD. World Investment Report 2024. Regional Reshoring Trends.
- Comanita B. Coal to Gas and End-of-Cycle Technologies. Chemistry Today, 2013, 31(1):43–47.
- Eurostat. EU Natural Gas Imports by Partner Country – 2024 Report.
- Atlantic Council. U.S. Industrial Policy Tracker. 2024.
- Romanian National Bank. FDI Inflows Q1 2025 Report.
- Linus Terhorst, ‘SAFE Alone Won’t Rearm Europe: Benefits and Challenges of the Instrument’, Commentary, 30 June 2025, RUSI
- KPMG. Environmental Due Diligence in Chemical M&A. White Paper, 2024.
- BASF. Investment in Zhanjiang Verbund Site, China. Press Release, 2024.
- IQVIA. Pharma Innovation Index 2024.
ABOUT THE AUTHOR
Bogdan Comanita founded Marketchemica in 2007 to support competitive intelligence in the fine and speciality chemicals industry. The company evolved to provide comprehensive strategic support for executives and investors in M&A, supply chain and market-risk management. Bogdan is the Managing Partner at MarketChemica & Assoc. He brings 30 years of fine and speciality chemicals industry experience to the practice. Recent company clients include Ontario Teachers’ Pension Plan, Macquarie Capital, Pfizer, Livent, Umicore and Wacker.
Login now to read the full article
Don’t have an account yet? Subscribe now, it’s free!
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt.
All pubblications
archive from 2022 to today
All articles
PDF Version
Receive our latest issue alerts
directly to your mailbox
