Milacron LLC, the only U.S.-based broad-line manufacturer of primary plastics equipment, will get a new private equity owner — in news announced just before NPE2012.
Avenue Capital Group will sell Cincinnati-based Milacron to CCMP Capital Advisors LLC, under an agreement announced March 30. The transaction is expected to close in the second quarter of 2012. Both private equity firms are based in New York.
Terms were not disclosed. Avenue Capital and three other investment firms bought Milacron out of Chapter 11 bankruptcy in 2009 for $175 million.
Milacron generated about $780 million in sales for 2011, more than 20 percent higher than 2010, officials said. The Cincinnati-based machinery maker employs 2,848 around the world. The company has factories in the United States, Germany, India and China.
In southwestern Ohio, Milacron employs 805 at its main assembly plant in Batavia and machining plant in Mount Orab.
Milacron makes injection presses, blow molding machines, extruders, structural foam machines, mold components and industrial fluids used in metal cutting.
Milacron filed for Chapter 11 on March 10, 2009, suffering from a liquidity crisis under substantial debt. Five months later, Milacron emerged with the new ownership, as a private company. Avenue Capital later bought out the other investors to become sole owner.
Milacron reorganized its balance sheet, shedding more than $500 million in liabilities. Avenue Capital officials said Milacron reinvested about $40 million into the company in equipment and research and development in 2010 and 2011.
At the same time, the machinery market has rebounded strongly from a punishing recession.
“Today Milacron's growth prospects are stronger than ever,” Milacron CEO Dennis Smith said in a news release. “With renewed financial stability and CCMP's support, we expect to continue to expand our market share, extend our global reach and invest in technologies to meet our customers' needs around the world over the long term.”
Smith said the sale “reflects the positive progress and the strength of the company.”
Economics analyst Bill Wood expects more machinery companies to change hands, given strengthening equipment demand and very low interest rates for financing deals.
“At this point in the business cycle, I think there will be some more of this activity. The horizon looks very different than it did a year ago. The numbers I've seen for plastics machinery look pretty robust,” said Wood, who runs Mountaintop Economics and Research in Greenfield, Mass.
CCMP Capital Advisors specializes in upper-middle-market buyouts and equity investments of $100 million to $500 million in the U.S. and Europe. Tim Walsh, managing director of CCMP and co-head of its industrials group, said the firm will help Milacron execute its plans for growth.
“Through its high-quality plastics processing equipment and industrial fluids products, attention to customer service and strong strategic leadership of Dennis and his team, we believe Milacron is very well-positioned to continue growing around the world and particularly in North America and emerging markets,” Walsh said in the release.
Company officials were not available for comment.
CCMP and Milacron said Milacron's management team will continue with the firm, which will remain based in Cincinnati.
CCMP has invested $13 billion in buyout and equity transactions since 1984. The firm targets consumer/retail and media, industrial, energy and health care.
On the industrial side, in the past, CCMP has been an investor in Berry Plastics Corp., Kl"ckner Pentaplast GmbH, Kraton Polymers and M&H Plastics Ltd.