AVON LAKE, OHIO (Jan. 24, 10:15 a.m. ET) — A specialty compounding deal and the sale of a commodity resin business caught the eye of mergers and acquisitions pros in the second half of 2011.
PolyOne Corp.'s $486 million purchase of ColorMatrix Corp. of Berea, Ohio, was described as “a marquee deal” by John Hart, plastics and packaging group director at financial firm P&M Corporate Finance LLC in Southfield, Mich.
The move by Avon Lake-based PolyOne — which ranks as North America's largest compounder — allows the firm to follow through in a big way on its strategy to expand into specialty sectors. ColorMatrix ranks as the world's largest supplier of liquid color — often used as a plastics additive — and makes other types of additives, as well as fluoropolymers. The firm has annual sales of almost $200 million.
“There were a lot of private equity firms interested in ColorMatrix, but they couldn't match the price that PolyOne could pay,” said Bill Ridenour, president of Polymer Transaction Advisors Inc. in Newbury, Ohio. “PolyOne is looking at the long-term here.”
Braskem SA's purchase of Dow Chemical Co.'s North American polypropylene business also headlined the second half of 2011. The $323 million deal gave São Paulo-based Braskem its first major presence in North America.
Other notable materials-related deals of the second half of 2011 include:
* PTT Chemical Public Co. Ltd.'s $150 million investment in a 50 percent stake in bioplastics leader NatureWorks LLC. Agricultural firm Cargill Inc. owns the other half of NatureWorks. Rayong, Thailand-based PTT is the third firm to partner with Cargill since NatureWorks was founded in 1997.
* Lubrizol Corp.'s purchase of Barcelona, Spain-based thermoplastic polyurethane maker Merquinsa Mercados Químicas SL. Merquinsa has been a successful niche player in the TPU field for almost 25 years.
* Plasticizers proved popular in the second half, as Eastman Chemical Co. of Kingsport, Tenn., and Lanxess Corp. of Pittsburgh each acquired firms in that sector.
For full-year 2011, data compiled by P&M showed the number of deals in the resin, color and compounding sector fell 25 percent to a total of 58. Looking to 2012, the focus “will be more on niches in the materials space,” according to David Evatz, a director with financial firm Stout Risius Ross Inc. in Chicago.
“There's a niche for compounds and colorants and other products with limited competition,” he said. “But not so much for large commodity businesses.”