Although a number of plastic materials businesses changed hands in the first half of 2010, none of the deals would qualify as a blockbuster.
Plastics News reported on nine such deals in the six-month period. Financial firms P&M Corporate Finance LLC of Southfield, Mich., and Blaige & Co. of Chicago tracked divergent trends in materials deals.
Globally, the number of first-half resin, color and compounding deals in 2010 climbed from 27 to 31 when compared with the same period in 2009, according to P&M. Blaige reported the global market is on track to record 86 such deals in 2010, a drop of seven from the 2009 total.
The biggest of the deals was Bain Capital's $1.6 billion purchase of Styron, the styrenics and rubber business of Dow Chemical Co. Some market watchers were surprised at the relatively low price Styron sold for, saying it could have commanded a price two to three times higher even five years ago. But declining profitability in the benzene chain affected the overall value of the business.
Other notable first-half materials deals included:
* Materials power Braskem SA of São Paulo paying $350 million in cash for the polypropylene business of Sunoco Inc. The deal included plants in Pennsylvania, Texas and West Virginia and gives Braskem its largest presence in North America to date.
* Construction contractor Orascom Construction Industries Co. of Cairo paying almost $420 million for the melamine resin business of Royal DSM NV, which ranks as the world's largest. The deal also includes DSM's ammonia and fertilizers businesses.
* The Advanced Engineered Materials unit of Dallas-based Celanese Corp. which includes Ticona buying the Zenite-brand liquid crystal polymer and Thermx-brand PCT (polycyclohexanedimethylene terephthalate) specialty resin businesses from DuPont Co. for an undisclosed price. Those materials combined for sales of $40 million last year.
* Nylon resin and fiber maker Solutia Inc. of St. Louis acquiring German specialty polymer materials company Etimex Solar GmbH from private equity group Alpha Gruppe and other owners for $325 million. Etimex Solar supplies ethylene vinyl acetate encapsulants to the solar photovoltaics market.
* PET resin producer Eastman Chemical Co. of Kingsport, Tenn., buying specialty plasticizer maker Genovique Specialties Corp. for an undisclosed price. The deal includes plants in Maryland and Estonia and a joint venture site in China. Genovique, owned prior to the sale by private equity firm Arsenal Capital Partners, had sales of about $135 million in 2009.
* In a pair of smaller-scale compounding deals, A. Schulman Inc. of Fairlawn, Ohio, bought color concentrates maker McCann Color Inc. of North Canton, Ohio, and Italy's Radici Group, of Bergamo, bought compounder and recycler Michael Day Enterprises Inc. of Wadsworth, Ohio. Each deal was valued at less than $10 million.
In the second half of 2010, the materials sector could continue to see quite a bit of portfolio realignment, according to Michael Del Pero, a vice president with financial firm FocalPoint Partners LLC in Los Angeles.
I think we'll still see a shift into advanced materials and next-generation plastics, Del Pero said. Not huge moves but some very strategic plays.
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