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Blaige talks consolidation at thermoforming conference

By: Bill Bregar

October 1, 2013

ATLANTA — About 78 percent of U.S. plastics processors are small companies, meaning there is still room for consolidation in the segment, financial analyst Thomas Blaige said at the Society of Plastics Engineers Thermoforming Conference.

Rigid packaging accounts for 56 percent of mergers and acquisition activity in the packaging area, he said. and 54 percent of the largest players in thermoforming have merged or been sold.

Blaige, who runs Blaige & Co. in Chicago, was the keynote speaker kicking off the conference Sept. 10 in Atlanta. "There's a lot of pressure to consolidate, and there's a lot of pressure in the supply chain," he said.

One major deal affecting the thermoforming supply chain came when PolyOne Corp. bought sheet extruder and compounder Spartech Corp. in 2012. In mid-2013, PolyOne announced plans to close two Spartech sheet plants, among six total plants slated for closure. Speculation on the trade show floor at the SPE Thermoforming Conference was that new sheet extrusion companies may spring up to fill the gaps.

Blaige did not address the Spartech/PolyOne deal in his speech. But he did review some other blockbuster M&A action, including the 2010 sale of Pactiv Corp., North America's largest thermoformer, to Reynolds Group Holdings Ltd., part of Rank Group Ltd., owned by New Zealand billionaire Graeme Hart. Blaige said that was the biggest plastic deal of the decade.

Last year, Dart Container Corp., the third-largest thermoformer in North America, bought the second-largest, Solo Cup Co., for $1 billion.

More recently, in July, heavy-gauge thermoformers Penda Corp. and Fabri-Form Co. agreed to merge.

Deals driven by private equity have grown, but strategic buyers still accounted for 64 percent of all plastics M&A deals in 2012, Blaige said. In 2001, strategic buyers generated 85 percent of the transactions, he said.