Deal volume in plastics materials mergers and acquisitions showed modest growth in 2012, while valuations for those deals remained high when compared to other areas of the plastics market.

The resin, color and compounding sector recorded five more global deals in 2012 than in 2011, according to P&M Corporate Finance LLC in Southfield, Mich. That's a hike of 9 percent. When divided by product segments, resin showed six more deals for a 12 percent increase.

Average valuations for materials deals ranged from six to 11.5 times earnings in 2012, according to Polymer Transaction Advisors Inc. of Newbury, Ohio. That was the highest range among seven plastics categories tracked by PTA.

One 2012 deal remarked on by several M&A executives contacted by Plastics News was PolyOne Corp's purchase of plastic sheet maker and compounder Spartech Corp. for almost $400 million. That deal stood out because it will move Avon Lake, Ohio-based PolyOne, North America's largest compounder and con­centrate maker, more into plastic products, as compared to raw materials.

Elliott Farkas, commercial/industrial group vice president with William Blair & Co. in Chicago, said he would not be surprised if PolyOne divested some of the assets it has acquired from Spar­tech. Market pros Bill Ridenour and Thomas Blaige each said the deal might cause PolyOne to compete with some of its own customers. Ridenour is owner of PTA. Blaige is president of Thomas Blaige & Co. LLC in Chicago.

Andrew Petryk — managing director and principal at Brown Gibbons Lang & Co. in Cleveland — said the PolyOne-Spartech deal "is different, but I'm not sure if that makes it more risky." At Chicago-based Stout Risius Ross Inc., director David Evatz said that "the verdict is still out" on the deal, which likely won't be judged accurately until three years from now.

Ridenour also singled out resin distributor M. Holland Co.'s acquisition of fellow distributor Christler Chemical & Plastics Inc. — a deal in which Ridenour represented Holland.

Holland, based in Northbrook, Ill., "had strong geographic reasons" to do the deal with Wilsonville, Ore.-based Christler, which generates most of its sales from the Pacific Northwest, Ridenour said. Holland also wanted to increase its sales volume in engineering resins, he added.

Other notable plastic materials deals in the second half of 2012 included:

• Georgia Gulf Corp.'s merger with the commodity chemicals business of PPG Corp. Atlanta-based Georgia Gulf is a major supplier of PVC resins and compounds. The deal calls for PPG shareholders to own 50.5 percent of the new company, which will operate as Axiall Corp. The transaction also includes a $900 million cash payment from Georgia Gulf to Pittsburgh-based PPG, as well as Axiall taking on $200 million of debt.

• Resin distributor Ravago Holdings Americas was involved in three deals during the year, buying PET distributors Burcham International of Columbia, S.C., and Meckler & Associates of Menands, N.Y., as well as elastomer processor Goldsmith & Eggleton Inc. of Wadsworth, Ohio. Ravago is based in Orlando, Fla.

• Compounding firm A. Schulman Inc. bought compounder ECM Plastics Inc. of Worcester, Mass., for $36.5 million. The ECM deal was the sixth acquisition in less than three years for Fairlawn, Ohio-based Schulman.

• Chemtura Corp. sold two plastic additive product lines — antioxidants and ultraviolet stabilizers — to private equity firm SK Capital for almost $200 million. The deal included six global plants. Officials with New York-based SK estimated that the two businesses could generate annual sales of around $500 million.