Exit and Growth Strategies for Middle Market Businesses

Plastics & Rubber Industry M&A News

By Jim Zipursky | Jun 10, 2016

plastics & rubber industryM&A activity for North American based target companies in the Plastics & Rubber industry for Q1 2016 included 18 closed deals, according to data published by industry data tracker FactSet.  The average transaction value was $49 million.

One of the major deals in the sector this year was Trelleborg A.B. and Freudenberg Group moving forward with a plan where Freudenberg will become sole owner of joint venture TrelleborgVibracoustic GmbH. The acquisition of Trellborg’s half of the JV is based on an enterprise value of a little more than $2 billion. The company will receive about $7.7 billion in addition to a dividend of $1.6 billion it received in December, putting the total value of deal at approximately $9.3 billion.

In late March, private equity group Arsenal Capital made three acquisitions in the polyurethane foam space. Arsenal will combine Pacific Urethanes LLC (Ontario, CA), a majority stake in Elite Foam, Inc. (Newnan, GA) and the foam production assets of Hickory Springs Manufacturing Co. (Conover, NC) to form Elite Comfort Solutions. Purchase prices were not disclosed.

Commodity pricing for rubber products dropped significantly in the first quarter lowering materials prices for manufacturers.

The global market for reinforced plastic composite materials is forecast to rise 3.5% per year through 2020, according to a recent report by BCC Research. Growing demand for carbon fiber-reinforced resins is expected to be partially driven by the automotive industry’s need to meet increasingly stringent fuel efficiency requirements. Replacing metal automobile components with ones made from carbon fiber helps automakers reduce vehicle weight in order to comply with US Corporate Annual Fuel Economy (CAFE) standards, which rose to 35.5 miles per gallon for the 2016 model year. By the 2025 model year CAFE standards will require auto makers to have average fuel economy of 54.5 miles per gallon.

Industry Indicators

  • US nondurable goods manufacturers’ shipments of plastics and rubber products, an indicator of plastic and rubber products production, fell 0.7% year-to-date in February 2016 compared to the same period in 2015.
  • The spot price of crude oil, a key raw material in plastic and rubber manufacturing fell 29.1% in the week ending April 8, 2016, compared to the same week in 2015.

Posted by Jim Zipursky.

Read the Entire Plastics & Rubber 2nd Quarter Newsletter Here

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