Two months after Siemens AG placed the world's largest plastics equipment maker on the selling block, it looks like Mannesmann Plastics Machinery AG is out of the price range of most competing equipment makers.
That means any buyer interested in the whole package will likely be an investment firm, observers say. So far, Germany's SMS AG is the only company to confirm publicly an interest in MPM, and officials of SMS — the maker of Battenfeld, American Maplan and Cincinnati Extrusion machines — are not giving out many details.
MPM Chairman Wolfgang Vogl said a sale could come together quickly, in the next two or three months. Vogl continues to insist that no bids will be accepted for individual units of MPM. All six of the member companies — Krauss-Maffei, Van Dorn Demag, Demag Ergotech, Netstal, Billion and Berstorff — will be sold only as a block, he said.
"The group, Mannesmann Plastics Machinery, is going to be sold as a group. We do not intend to sell part of it," Vogl said in a Jan. 31 telephone interview from MPM's headquarters in Munich, Germany.
That stipulation could choke off any bids from existing plastics machinery companies.
MPM is big enough to choke a horse — or even the No. 2 player, Milacron Inc. At $1.2 billion in 2000 sales, MPM is about 33 percent larger than Milacron's Plastics Technologies Group, which just reported 2000 sales of $873.8 million. Total sales for Cincinnati-based Milacron were $1.58 billion.
Two published reports have placed MPM's asking price at $920 million and more than $1.5 billion, although Vogl declined to say if those numbers are correct.
Financial analysts say Milacron would not be able to swing that large of a deal. Milacron's debt, while not at a critical level, is too high to buy MPM, the analysts said.
"They're not financially in a good position to buy the whole company," said Chris Staneluis at Midwest Research Maxus Group Ltd. in Cleveland.
Milacron "can't even come close to buying MPM," said Walter Liptak of McDonald & Co. in Chicago. "They probably would be interested in looking, because they always want to talk. But they're not going to buy [MPM]," he said. "Maybe if it was sold to somebody and then split up, or if the strategy changes, and they split it up, they could acquire some parts of it."
In a Jan. 31 conference call to analysts, Daniel J. Meyer, Milacron's chairman and chief executive officer, skirted the question.
"Based on our position right now, we just can't comment on any significant-size acquisitions like that," he said.
Later in the session, however, Meyer said Milacron is looking at "two or three" acquisitions in plastics right now but added that "they're relatively small."
Milacron did not respond to questions from Plastics News.
Here's a look at what other companies are saying:
Interest by SMS in Mannesmann Plastics Machinery first surfaced in news reports from Europe, according to Helmut Eschwey, chairman of SMS Plastics Technology. Responding to reporters' questions, Heinrich Weiss, chairman of the SMS managing board, indicated that SMS indeed would be interested in looking at MPM.
SMS officials have not made any other public comments on the matter, Eschwey said.
"It wouldn't surprise me if the number of financial investors is bigger than the number of strategic investors, at least at the beginning," Eschwey said.
SMS, based in Dusseldorf, Germany, reported $2.4 billion in sales for its last fiscal year, ended June 30. Plastics machinery accounted for $523.5 million of that total.
Engel Vertriebsgessellschaft mbH is not interested, according to Peter Neumann, managing director at the Schwertberg, Austria, press maker.
"We know that MPM only wants to sell the whole package. If you see their financials and also our antitrust laws in Europe, those are two reasons that there's no realistic chance that Engel could take over a group which is several times larger than we are," Neumann said.
All the MPM units except the U.S.-based Van Dorn Demag are based in Europe.
He said Engel might be interested if MPM changes its mind and decides to sell the units individually.
Canada's Husky Injection Molding Systems Ltd. also will sit on the sidelines. A company spokesman noted President Robert Schad had said at the annual shareholders meeting in December that Husky had been approached to participate but had declined.
Madison Capital Partners does not plan to contact MPM, according to Larry Gies, president of the Chicago investment firm. Madison Capital has bought several equipment makers in recent years, including John Brown Plastics Machinery and four units of Dynisco Inc.
Gies thinks MPM probably will go to a large private equity group because of its size.
Another potential buyer, Arburg GmbH + Co. of Lossburg, Germany, did not return telephone calls for this story.
The number of parties interested in buying MPM ranges from 12-40, according to industry sources and people within MPM contacted in January.
Vogl declined to give a number. He also would not identify companies that have contacted MPM or its agent, Merrill Lynch's London office, which is coordinating the bidding process. MPM already has sent several buyers packages of detailed, prospectus-type information, called memorandums.
MPM and Merrill Lynch expect to winnow down the companies to a short list, then begin negotiations with those firms around March, Vogl said.
Vogl, 56, said he wants to remain as MPM's top executive after the sale. He defended the decision to find a buyer for all six MPM companies.
"The value of this group, as a group, is much higher than a single part of it," he said.