Chemicals & Specialty Materials: Resilient Demand for CASE Providers

With an improving economy and more investors eager to deploy capital, several pockets of chemicals and specialty materials are seeing M&A momentum, including coatings, adhesives, sealants, and elastomers (CASE).

Our recent engagements with UW Solutions (UW) and H.B. Fuller’s Flooring business demonstrate how CASE solutions are driving strong investor interest and appealing opportunities for strategic buyers.

CASE: Differentiated, Value-Add Solutions

“Companies in the CASE subsector appeal to buyers because of their inherent differentiation, ability to drive value, and resilient demand in higher-growth end markets,” says Tim Webb, a group head in our Industrials Group. “This creates stickier customer relationships, stronger barriers to entry, and better margins.”

CASE solutions are ubiquitous, with many industries requiring a variety of product types for a range of applications. Several high-growth end markets with long-term tailwinds have particularly strong demand for such products, including infrastructure, warehousing, semiconductors and electronics, medical, and electrical, among others. “All of these areas have a critical and recurring need for CASE solutions, making the companies that serve them especially appealing to investors,” says John Lautemann, a managing director.

Harris Williams advised UW on its sale to Apogee Enterprises Inc. and H.B. Fuller on the sale of its Flooring business to Pacific Avenue Capital Partners, which highlight the growing M&A opportunity within CASE. UW is a vertically integrated manufacturer of branded coated substrates, specializing in the formulation of coatings and its proprietary application process. The business offers high-performance solutions for warehouses, consumer photography, and other in-demand applications, leveraging differentiated ultraviolet and electron beam coating technologies and expertise.

“The company is aligned with many important industry themes, including rising adoption of automation equipment and robotics, increasing demand for last-mile logistics, and growth in photographed images from smart phone-usage,” says Lautemann.

H.B. Fuller’s Flooring business is a leading provider of adhesives, grouts, mortars, and other related products serving commercial and residential flooring applications. The business offers a comprehensive suite of flooring preparation and adhesive solutions across all flooring types, including tile, stone, wood, carpet, and resilient flooring.

“With a variety of use cases for many different product categories, the CASE sector offers significant value-creation opportunities,” says Lautemann. “We look forward to seeing more companies like UW Solutions and H.B. Fuller’s Flooring business that serve high-growth end markets capture buyer attention.”

Strategic Buyers Remain Aggressive

Strategic buyers are poised to be especially active across chemicals and specialty materials due to a combination of greater macroeconomic clarity and healthier corporate balance sheets. In 2024, strategic buyers made up 61% of North American chemicals and specialty materials M&A transactions—a meaningful uptick to the 51% share of chemicals M&A in 2023.¹

Strategic buyers continue to capitalize on sale processes by taking a longer-term view and underwriting synergies to differentiate themselves from other buyers. In the case of UW, Apogee believed in the long-term growth and industry tailwinds supporting the company’s proprietary offering and was eager to underwrite those opportunities.

“We were excited to partner with UW’s leadership team early in their sale process, allowing us to be a strategic thought partner as they prepared to enter the market,” explains Lautemann. “This led to us previewing the opportunity to select buyers on an informal basis, which unlocked aggressive buyer behavior from Apogee and a compelling valuation.”

Corporate Portfolio Optimization Drives Strategic Activity

Large chemical conglomerates are evaluating their portfolios to sharpen their focus, expand their capabilities, or increase their exposure to higher-growth end markets. With shareholders continuing to scrutinize profitability, and performance remaining end-market dependent, M&A remains an important strategy.

Our work with UW and H.B. Fuller’s Flooring business illustrates why corporates remain so active in today’s chemicals M&A environment. UW represented an opportunity for Apogee to align itself with a differentiated business serving rapidly expanding end markets that Apogee had previously underserved.

H.B. Fuller, on the other hand, viewed divesting its flooring business as an opportunity to unlock value for both the segment and its broader platform as it continues to realign toward its strategic goals. Pacific Avenue Capital Partners’ investment has created a stand-alone platform with focused capital to accelerate organic and inorganic growth in the business.

“Pacific Avenue has a long history of investing in specialty chemicals and building products carve-outs, and they are a compelling partner for the next chapter of H.B. Fuller’s Flooring business,” adds Ty Denoncourt, a managing director.

Poised for Accelerated M&A Activity

CASE providers will continue to experience strong M&A momentum due to their highly differentiated, value-add solutions and resilient demand characteristics. And with increasingly positive macro sentiment and greater confidence among strategic and private equity buyers, the stage is set for accelerated activity throughout the chemicals and specialty materials landscape.

“Against an improving and bullish backdrop, investors of all kinds are finding appealing avenues to put capital to work across chemicals and specialty materials,” says Webb. “M&A remains a great way for these investors to help leading businesses enter new higher-growth product categories and end markets.”

To further discuss M&A in chemicals and specialty materials, please contact our senior professionals.