Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Plastics/Rubber’ Category

M&A News From Plastics & Rubber Industry

By Jim Zipursky | Nov 12, 2015

Plastics & RubberMany European plastics & rubber product manufacturers have not seen their costs drop even amid lower global oil prices, because supplies of raw materials have been constrained by petrochemical plant shutdowns at major plastics producers, according to the Financial Times. More than 40 shutdowns of European petrochemical plants, many of them unscheduled, took place in the first six months of 2015, compared to about 20 shutdowns during the whole of 2014. Many shutdowns have been due to underinvestment in plant infrastructure during the past decade.

Growing interest in passenger vehicles, rising exports of automotive plastics & rubber components, and increasing regulation of vehicular emissions are creating increased demand for automotive plastics in Brazil, Russia, India, and China (the BRIC countries). In a bid to expand its footprint in India’s growing automotive market, LyondellBasell agreed to acquire SJS Plastiblends, an India-based manufacturer of thermoplastics, in August 2015. The automotive plastics market in BRIC countries, which was valued at $11.2 billion in 2014, will experience a compound annual growth rate of 15.4% between 2015 and 2020, according to a recent report by Future Market Insights. The market research firm identified polypropylene, polyurethanes, acrylonitrile butadiene styrene, and polycarbonates as the materials with the highest automotive industry consumption rates. The automotive sector is one of the largest markets for plastics & rubber, which are used for parts ranging from upholstery and interior trim pieces to engine components and exterior panels.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber 4th Quarter Newsletter Here

Plastics and Rubber Industry News

By Jim Zipursky | Sep 21, 2015

Green TubingAccording to a report from industry trade publication Plastic News, the plastics and rubber sector should continue its strong M&A activity for the remainder of 2015 following a robust 2014. Analyst Ben Whiting from KeyBanc Capital Markets reports that some companies are commanding EBITDA multiples as high as 7, with specialty firms seeing multiples closer to 9 or 10.

As US shale gas production drives down plastic resin manufacturing costs, global plastics companies may reconfigure their manufacturing strategies and invest in increased US production capacity. The increase in US shale gas production is expected to generate $25 billion in new US plastic resin manufacturing capacity over the next decade, according to a May 2015 report by the American Chemistry Council (ACC). The abundance of shale gas liquids, a key feedstock for plastic resin manufacturers, is forecast to make US resin producers more competitive and spur investment in manufacturing capacity. The boom in US plastic resin production is expected to increase exports from $6.4 billion in 2014 to $21.5 billion by 2030, according to Nextant Consulting. Increased US plastics production is also forecast to create more than 125,000 plastics industry jobs over the next decade, according to the ACC.

Fed by plentiful domestic supplies of shale gas, the US plastics manufacturing industry is expected to grow its workforce by more than 20% over next decade, according to a report released by ACC in May 2015. The trade group projects the industry will add 462,000 jobs as ample gas feedstock supplies attract as much as $47 billion in capacity expansion investments. The boom in gas extraction from shale formations has given the US a competitive advantage over other countries, most of which rely primarily on oil-based feedstocks for plastics production. The ACC cited a report from Nexant Consulting that projects net exports of plastics from the US will triple between 2014 and 2030.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber Q3 Newsletter Here

News From the Plastics and Rubber Industry

By Jim Zipursky | Mar 20, 2015

Plastics and RubberPlastics and rubber M&A activity has been fueled by larger companies and private equity groups looking acquire new technology to add to existing divisions or portfolio companies. As the economy continues to grow the plastics and rubber sector should see continued M&A activity.

According to First Research, an industry research organization, US plastics and rubber manufacturers stand to benefit from the US boom in natural gas shale plays, according to Trib Total Media. US production of ethane, a natural gas liquid, has increased significantly from shale plays including the Marcellus, Utica, and Bakken shale formations. In processing plants called ethane crackers, ethane is produced from natural gas. Ethane is then used to produce ethylene, the key ingredient in polyethylene plastic. Royal Dutch Shell is reported to be considering the construction of a new ethane cracker in Beaver County, Pennsylvania, to process natural gas from the Marcellus Shale. The US division of Brazilian petrochemical firm Braskem is proposing construction of an ethane cracker in West Virginia.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber 1st Quarter Newsletter Here


Plastics & Rubber Industry M&A Trends

By Jim Zipursky | Dec 29, 2014

The life of a new product from concept to market has decreased from years to months, affecting the entire supply chain of plastic products. Equipment manufacturers look increasingly to closer collaboration with plastics suppliers to cut production timetables, asking them to be responsible for specialized molded component design, development, and assembly.


Read the Entire Plastics & Rubber 4th Quarter Newsletter Here

Q3 Plastics & Rubber M&A Industry Report

By Kim Levin | Oct 17, 2014

granulesM&A activity for North American based target companies in the plastics and rubber sector for Q2 2014 included 20 closed deals and total deal value of approximately $2.65 billion, according to data provided by S&P Capital IQ. This is a 20 percent decrease in the number of deals since Q1 2014, but a large increase in deal value compared to the $340 million deal volume in the previous quarter.

Read the Entire Plastics & Rubber 3rd Quarter Newsletter Here

Q2 Plastics & Rubber Mergers & Acquisitions Update

By Kim Levin | Jun 20, 2014

Green TubingM&A activity in the Plastics and Rubber sector for North American companies in Q1 2014 included 25 closed deals according to data provided by S&P Capital IQ. The average deal value was $56 million led by a number of strategic acquirers looking to expand market share and capabilities. PE buyers were also active in the space looking to deploy capital.

Read the Entire Plastics & Rubber 2nd Quarter Newsletter Here

Plastics & Rubber Q1 M&A Update

By Kim Levin | Apr 11, 2014

Sell your Plastic BusinessM&A activity in the North American Plastics and Rubber sector for Q4 2013 through February 14, 2014 included 33 deals announced or closed according to data provided by S&P Capital IQ. Activity in the space has been partly spearheaded by manufacturers of caps and closures according to data published by industry trade magazine Plastics News. There has been significant consolidation in this particular niche as strategic and private equity buyers look to gobble up market share and increase their product offerings. Consolidation has shrunk the number of companies with less than $50 million of revenue to just 18 percent of the market, whereas companies with more than $500 million in annual sales now control 22% of the market.

Read the Entire Plastics & Rubber 1st Quarter Newsletter Here

Plastics & Rubber M&A Industry Update

By Kim Levin | Jan 31, 2014

plastic granulesQ3 M&A activity in the Chemicals/Plastics sector was relatively active with 35 deals announced or closed in the quarter according to information from S&P Capital IQ. With strong demand for plastic and chemically derived products in the consumer goods, automotive, industrial manufacturing and construction sectors, a recovering economy should only increase M&A activity going forward.




Read the Entire Plastics  & Rubber 4th Quarter Newsletter Here

Plastics & Rubber M&A Update

By Kim Levin | Nov 08, 2013

Plastic BottlesAccording to data from S&P Capital IQ, transactional activity in plastics and rubber manufacturing since the end of 2010 has benefited from improving financing conditions, stable business growth and narrowing gaps in business valuations. In 2012, financial and strategic buyers became more active, resulting in an increase in the number of deals completed by approximately 3%. Plastics M&A volume increased more than 25% in 2012, with the highest amount of activity generated by plastic packaging and industrial plastics transactions. Many private equity began liquidating their holdings in the space, due to increasing multiples in 2012. 2013 is expected to see a slight increase in M&A activity for the plastics and rubber manufacturing industry in North America, mainly driven by sellers looking to take advantage of high valuation multiples and favorable access to capital.

Read the Entire Plastics & Rubber 3rd Quarter Newsletter Here