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M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | Aug 17, 2018

The report below provides a good overview of the third quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q2 2018 included 35 closed deals, according to data published by industry data tracker FactSet.
One of the notable middle market transactions was announced in June when a private group led by the management of Comar, LLC and Morgan Stanley Capital Partners (Private Equity) acquired Comar from Graham Partners, Inc., for an undisclosed amount. Founded in 1949, Comar is located in Voorhees, New Jersey and manufactures plastic bottles and other plastic products.

Injection molders across the US have differentiated themselves by specializing in specific processes. Highly specialized firms can be more attractive acquisition targets for larger companies looking to improve capabilities.

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M&A News in the Metal Fabrication Industry Sector

By Jim Zipursky | Aug 09, 2018

The report below provides a good overview of the third Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q2 2018 included 52 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions was announced in June when Steel Dynamics, Inc. acquired Companhia Siderúrgica Nacional, LLC for US$400 million in cash. The transaction is expected to be accretive to near-term earnings and cash flow per share. In addition, the transaction is believed to expand Steel Dynamics’ annual flat roll steel shipping capacity to 8.4 million tons and total shipping capability to 12.4 million tons. Companhia Siderúrgica Nacional is located in Terre Haute, Indiana and manufactures coiled steel sheet products.

Tariffs on steel imposed by the Trump administration have had the sector in flux. The graph below illustrates how tariffs effect certain states.
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M&A News in the Metal Fabrication Industry Sector

By Jim Zipursky | May 30, 2018

The report below provides a good overview of the second Quarter M&A activity in the Metal Fabrication Industry Sector. M&A activity for North American based target companies in the Metal Fabrication sector for Q1 2018 included 31 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions announced in the quarter was in January when Wynnchurch Capital, LLC announced that it had completed an investment in Anderson Metals Corporation, Inc. Terms of the deal were not disclosed. Anderson is a manufacturer of brass fittings, valves, pipe nipples and related products to the plumbing, hardware and general industrial end-markets. The Company is headquartered in Kansas City, Missouri and was founded in 1947.

The demand for fabricated steel products rose sharply in Q1 2018 partly driven by the potential for tariffs implemented by the current administration.

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M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | May 21, 2018

The report below provides a good overview of the second quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q1 2018 included 18 closed deals, according to data published by industry data tracker FactSet.

One of the notable middle market transactions closed in March when Huntsman Corp acquired Demilec (USA), Inc., a portfolio company of Sun Capital Partners Inc, for US$350 million in cash, subject to adjustments. Huntsman Corp. manufactures chemicals for the plastics, automotive and construction industries. Demilec engages in the manufacture of spray polyurethane foam insulation and coatings. The firm offers products such as demilec APX, sealection 500, pour-in-place, agribalance, heatlok soy, barnseal, geolok, and eco-pur pour-in-place. It also provides a range of products to meet the needs of homeowners, building professionals, architects and insulation contractors.

Worldwide tire sales, a major indicator of rubber usage, are forecast to grow 7% annually to reach a value of about $260 billion by 2019, according to the Freedonia Group.
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M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | Mar 22, 2018

The report below provides a good overview of the first quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q4 2017 included 21 closed deals, according to data published by industry data tracker FactSet.
One of the notable transactions of the quarter closed in October when Genstar Capital, LLC acquired Tekni Plex, Inc., a portfolio company of American Securities, LLC, for a reported value approximately US$1.5 billion. Tekni-Plex manufactures and sells packaging, packaging products and materials, and tubing products primarily for the food and beverage, healthcare, specialty, lawn and garden and consumer markets. The company was founded in 1967 and is headquartered in Wayne, PA.

Rubber and plastic continue to Be major components for a wide range of commercial and industrial products.

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M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | Nov 20, 2017

Sell your Plastic BusinessThe report below provides a good overview of the fourth quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q3 2017 included 18 closed deals, according to data published by industry data tracker FactSet.

Plastics manufacturers that serve the retail sector have seen steady growth with online retailers, according to Plastics News. Nonstore retail, which primarily includes online retailers such as Amazon, saw sales growth of nearly 11% in the first four months of 2017. While online sales are expected to continue to drive demand for foam packing peanuts and bubble wrap, nonstore retail should also spur demand for specialized durable and reusable plastic shipping containers.

Demand for plastics and rubber in the manufacturing sector has been a guy driver for sector growth throughout 2017.

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M&A News In The Plastics and Rubber Industry Sector

By Jim Zipursky | Oct 09, 2017

The report below provides a good overview of the 3rd Quarter M&A activity in the Plastics and Rubber Industry Sector. M&A activity for North American based target companies in the Plastics and Rubber sector for Q2 2017 included 24 closed deals, according to data published by industry data tracker FactSet. The average purchase price was $73million.

The high-performance tire sector has been among the fastest-growing parts of the tire market. According to a recent report from Smithers Rapra, The Future of High-Performance Tires to 2022, the high-performance tire market will grow at 6.3 percent year-on-year through to 2022 reaching a market value of $74.7 billion, up from $54.9 billion in 2017.

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Plastics & Rubber Industry | M&A News

By Jim Zipursky | Mar 23, 2017

plastics & rubberPrivate equity has been in the plastics & rubber products space. In November 2016 AEA Investors LP acquired TricorBraun Holdings Inc, a portfolio company of Goldman Sachs Mezzanine Partners and CHS Capital LLC, for an undisclosed amount in cash. The transaction was funded through US$735 million senior secured credit facility provided by the Antares Capital LP. TricorBraun Holdings operates as a holding company with interests in plastic packaging solutions. It supplies rigid packaging and related components for the personal care, cosmetics, healthcare, food and beverage, industrial and household chemical markets.

Production overcapacity, weak demand, and pressure from imports have contributed to slow growth in the US PET (polyethylene terephthalate) plastic blow molded packaging market, according to industry experts cited by Plastics News in November 2016. Even as the US industry has consolidated over the last few years, overcapacity persists, which has caused PET producers to reduce prices as they compete for market share and to cut costs in an effort to preserve margins. Industry watchers suggest that PET converters’ cost-cutting efforts have come at the expense of product innovation investment, as some producers have reduced engineering staffs. Manufacturers also face competitive pressure from imports, as well as alternative packaging products, including paper and stand-up pouches, that have innovated in marketing and product design. Soft drink and water packaging remain steady markets for PET converters, but dairy and juice markets are flat. Food offers an opportunity for growth, but further hot-fill and barrier (oxygen, moisture, UV light) innovation is needed. Other growth markets include dairy substitutes (almond and soy milk), and sports drinks. One upside for PET converters is that low oil prices are likely to keep resin feedstock prices in check.

Industry Indicators
  • US nondurable goods manufacturers’ shipments of chemical products, an indicator of demand for plastic resin and synthetic fibers, rose 2.0% year-to-date in November 2016 compared to the same period in 2015.
  • The spot price of crude oil, a key raw material in plastic resin and synthetic fiber manufacturing, rose 50.3% in the week ending January 13, 2017, compared to the same week in 2016.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber 1st Quarter Newsletter Here


M&A News From the Plastics Industry

By Jim Zipursky | Dec 16, 2016

plastics industryA new process developed by Exxon Mobil and the Georgia Institute of Technology could eventually reduce the costs of manufacturing in the plastics industry while slashing energy consumption and greenhouse emissions. The process uses a new polymer-based membrane to filter para-xylene, a building block for polyester, from complex hydrocarbon feedstocks instead of the energy-intensive heating process currently used. If it proves to be commercially scalable, the technology could reduce the energy costs of plastics production by $2 billion annually. The process might also decrease carbon dioxide emissions by up to 45 million tons per year. More testing is required to determine of the membranes can withstand the rigors of real-world production conditions. If further research is successful, a pilot program may be put in place to test a plant-scale demonstration of the technology. The initial research was published in Science in August 2016.

Industry Indicators

  • US nondurable goods manufacturers’ shipments of plastics and rubber products, an indicator of plastic and rubber products production, fell 0.1% year-to-date in August 2016 compared to the same period in 2015.
  • The spot price of crude oil, a key raw material in plastic and rubber manufacturing, rose 10.0% in the week ending October 7, 2016, compared to the same week in 2015.
  • US nondurable goods manufacturers’ shipments of chemical products rose 2.3% year-to-date in August 2016 compared to the same period in 2015.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber 4th Quarter Newsletter Here


What Keeps M&A Transactions From Closing?

By Jim Zipursky | Oct 25, 2016

What keeps M&A transactions from closing? A recent survey of investment bankers at CFA regarding their experience with M&A deal failures leads to interesting results, as can be seen in the accompanying graphic.

figure-1-2016-10

Failure reasons can be broken into five general categories: Seller Issues, Buyer Issues, Company Issues, External Factors, and The Process. Not surprising, Seller Issues and Company Issues account for nearly 66% of deal failures. Buyer Issues and The Process account for 28% of deal failures.

What is the number one reason for deal failures? Earnings fluctuations, which means the earnings are not as projected. This causes significant problems for buyers, making valuations and lending much more difficult. Not surprising, the number two reason is Seller valuation issues, which means Sellers want more than their company is worth. Taken in the aggregate, across all five categories, valuation-related issues account for more than 52% of deal failures. Clearly, valuation/earnings issues are the number one cause of deal failures.

Surprisingly, external factors and the process itself do not cause as many deal failures. The silver lining in these results? Seller Issues and Company Issues can be avoided with proper preparation of the seller and the company. A seller who has reasonable valuation expectations, clean financial statements with verifiable earnings and realistic financial projections help keep most deals out of the ditch.

Posted by Jim Zipursky.

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