Materials-related M&A deals dip slightly

By Frank Esposito
Senior Staff Reporter

Published: July 12, 2011 6:00 am ET

Related to this story

Topics Materials, Suppliers

SOUTHFIELD, MICH. (July 12, 11:20 a.m. ET) — The pace of materials-related deals in the plastics mergers and acquisitions market slowed down a bit in the first half of 2011.

The number of global deals in the resin, color and compounding sector in the first half basically was flat when compared to the first half of 2010 — dropping only from 35 to 34 — according to data supplied by P&M Corporate Finance LLC in Southfield. Plastics News reported on 10 such deals in the first half of 2011 — the same amount as covered in the second half of 2010.

Looked at by product segment, the number of resin deals fell 17 percent to 30 in the first half when compared to the same period in 2010, according to P&M.

The biggest dollar-value materials deal of the first half took place in Europe, where Solvay SA of Brussels agreed to buy Rhodia SA of Lyon, France, in a deal worth $4.8 billion. Both firms have large specialty plastics businesses.

Before the deal was announced, Rhodia was involved in a smaller deal, buying Indian engineering resins compounder PI Industries Ltd.

Also in the first half, financial giant Berkshire Hathaway Inc. of Omaha, Neb., announced its purchase of Wickliffe, Ohio-based Lubrizol Corp. for $9.7 billion. Lubrizol’s Advanced Materials unit — including Estane-brand thermoplastic polyurethane — had 2010 sales of $1.5 billion. In another sizable first-half materials deal, DAK Americas LLC of Charlotte, N.C., bought Bay St. Louis, Miss.-based Wellman Inc.’s PET resin business for $185 million.

Private equity firms also remained active in the materials sector in the first half as Geneva Glen Capital LLC of Chicago bought a majority stake in Flow Polymers, a Cleveland-based rubber additives maker that’s looking to expand its plastic additives business.

One unusual first-half materials deal happened when PVC resin maker Georgia Gulf Corp. of Atlanta bought the PVC siding business of Crane Group of Columbus, Ohio. Georgia Gulf had made a huge downstream move in 2006 when it bought building products maker Royal Group Inc. of Woodbridge, Ontario, for $1.6 billion, but the business has struggled as a result of the collapse of the U.S. construction market.

M&A pros David Evatz, Stewart Kohl and John Hart each said that they doubted other plastics materials firms were looking to make downstream moves.

“If it’s complementary to their core sectors, [materials firms] might do what they can to add value,” said Evatz, a director with Chicago financial firm Stout Risius Ross Inc. “But overall, there’s not a lot of diversification downstream.”

Kohl, co-CEO of private equity firm Riverside Co. in Cleveland, said materials companies “might look to [go downstream] to make up for lack of organic growth,” while Hart — P&M’s plastics and packaging group director — said he “hadn’t seen an emerging trend” for downstream investments.

Another factor that could affect future plastics materials M&A activity — according to financial pro Bill Ridenour — is the development of massive new natural gas discoveries in North America. Several energy and chemical firms are planning to expand capacity of plastic feedstock ethylene in the region, and Nova Chemicals Corp. in Calgary, Alberta, recently announced plans to add new polyethylene production in Canada.

Natural gas discoveries and development could make markets for plastic feedstocks more attractive and create investment opportunities as a result, said Ridenour, president of Polymer Transaction Advisors Inc. in Newbury, Ohio.


Comments

Materials-related M&A deals dip slightly

By Frank Esposito
Senior Staff Reporter

Published: July 12, 2011 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Resin market has consolidated as it matured

November 28, 2014 6:00 am ET

The classic quantity vs. quality debate has played out in the ranks of North American resin makers in the last 25 years.    More

Image

Sipa buys Automa's PET bottle machinery business

November 28, 2014 10:02 am ET

Sipa SpA has acquired the injection-stretch-blow molding (ISBM) equipment business of Automa SpA. No transaction price was disclosed in the...    More

Image

'Evolution, not revolution' on the horizon for A. Schulman

November 28, 2014 6:00 am ET

Bernard Rzepka's schedule for his first year as CEO of compounding leader A. Schulman Inc. does not include reinventing the wheel.    More

Image

Penn Color plans $10 million expansion

November 28, 2014 6:00 am ET

Penn Color Inc. will break ground late next year on a 100,000-square-foot expansion of its manufacturing site in Hatfield, Pa.    More

New liquid colorants for PET packaging released

November 28, 2014 6:00 am ET

PolyOne Corp. has launched a line of new liquid colorants for PET packaging in personal care and cosmetic products.    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events