February 22, 2013
The saga of Milacron LLC is full of ups and downs, from Chapter 11 bankruptcy in 2009, through two private equity owners and finally, buying hot-runner major Mold-Masters Ltd. for $968 million in a blockbuster deal announced Feb. 12.
Milacron already was a major force in mold making through its DME business. Bringing in Mold-Masters makes Milacron a major global force in hot runners.
What a roller coaster ride in just four years! Buying Mold-Masters is certainly a bold move, for a lot of money. When reports broke that 3i Group plc planned to sell Mold-Masters, sources said the price could be a little over $700 million.
Private equity firm Onex Corp. only spent around $730 million to buy KraussMaffei AG, the world's largest maker of plastics machinery, in a deal that closed at the end of 2012. KM generated order income of $1.5 billion and employs several thousand people around the world. Mold-Masters employs 1,650 at seven plants worldwide, and generated 2012 sales of $271 million.
We'll leave it to the financial pros — and investors in Milacron's private equity owner, CCMP Capital Advisors LLC — to determine if the price was too high. Check back in three to five years or so, the typical span of private equity ownership, to see if CCMP can make out on the deal. And of course, Avenue Capital Group and three other investment firms spent just $175 million to buy Milacron out of its five-month-long bankruptcy in 2009, the depth of the recession.
Reorganized balance sheet in hand, Milacron began a major turnaround fueled by a quick rebound for the slumping plastics machinery sector. Avenue Capital sold to CCMP for undisclosed terms last year.
Milacron technical experts should move to use hot runners to their full advantage. Milacron can follow the example of Husky Injection Molding Systems Ltd., which has parlayed its own expertise in hot runners and manifolds, tied to its injection molding machines, to superfast molding times for PET preforms and other packaging.
In early January, when the media first reported that 3i planned to sell Mold-Masters, it seemed plausible that Husky would be interested. Husky has decided to focus on packaging and medical.
Milacron is still a broad-line injection press maker, so the Cincinnati company is able to extend Mold-Masters to nearly every end market. The industry will be watching to see if Milacron uses the hot-runner powerhouse to lead the industry to new levels of efficiency.