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Is pendulum swinging back toward strategic acquisitions?

By: Bill Bregar

July 2, 2013

BRISTOL, CONN. — It looks like a mini-trend: private equity owners selling major plastics-related businesses to strategic buyers like Barnes Group Inc.

Bristol-based Barnes bought Synventive Molding Solutions Group from Littlejohn & Co. LLC. Nordson Corp. of Westland, Ohio, bought the Xaloy screw and barrel business and EDI flat dies.

Both of those deals happened in 2012. Though Barnes and Nordson are totally different from each other, both acquisitions have a basic similarity: Barnes and Nordson are broad-based industrial companies that have diversified by picking up firms that give them broad exposure to the wide-ranging plastics industry.

Xaloy is a major component manufacturer for the entire plastics industry. And Synventive hot runners are used in injection molding, by far the biggest plastics segment.

Officials of Barnes and Nordson have said they want to buy more plastics-related companies. Both are publicly traded.

And this year, plastics machinery manufacturer Milacron LLC bought Mold-Masters Ltd., a big Canadian hot-runner maker, from an investment firm. The deal brings together hot runners and Milacron’s DME mold components. (Milacron is owned by private equity.)

Is this the start of a major trend? Not necessarily, said Patrick Dempsey, who is Barnes’ president and CEO. “From my perspective, I’m not sure what all the motivations of the various other companies are,” he said. “But for us, what I would highlight is that we clearly saw Synventive as a very attractive business aligned very well with what was our overall strategy.”

Did Barnes look at buying Mold-Masters? Or how about Xaloy/EDI? Dempsey said: “We don’t comment on those businesses that we actively participate [in], are pursuing or we’re looking at.”

Mold-Masters and Synventive compete against each other. But the prices were wildly different. Barnes paid $335 million to buy Synventive, which generated annual sales of about $160 million in 2012. Milacron plunked down $950 million for Mold-Masters, which had 2012 sales of $271 million.