The first half of 2012 wasn't exactly a barnburner for deals involving plastics materials firms.
The number of global resin deals involving makers of resin, compounds and concentrates fell from 35 to 27 when compared to the first half of 2011, according to P&M Corporate Finance LLC in Southfield, Mich. That's a drop of 23 percent.
Eastman Chemical Co.'s $4.8 billion acquisition of Solutia Inc. was the big-ticket materials deal of the first half. In plastics, Solutia's specialty plastic films will complement Eastman's line of specialty resins. Eastman paid a premium of more than 40 percent per-share in the deal, which will add more than $2 billion to Eastman's annual sales and is expected to create cost synergies of about $100 million by the end of 2013.
Another sizable first-half deal took place when private equity firm Huntsman Gay Global Capital LLC bought Citadel Plastic Holdings Inc., a compounding firm assembled from several acquisitions made by Chicago private equity company Wind Point Partners. No purchase price was disclosed, but industry insiders said the purchase price may have been as high as $350 million.
John Chrysikopoulos — a managing director with Mesirow Financial in Chicago — pointed out that the private equity world uses consolidation strategies a lot more than buyers from within the industry do, since their goal often is “to build a much bigger company.”
Compounders A. Schulman Inc. and RTP Co. each added specialty pieces to their businesses in the first half. Schulman paid $63 million for French specialty concentrates maker Elian SAS. RTP picked up the conductive compounds business of Clariant International Ltd. for an undisclosed price.
“We're still seeing industry buyers buy companies or parts of companies to fill out product lines and get new products to sell,” said Bill Ridenour, owner of Polymer Transaction Advisors Inc. in Newbury, Ohio.
One of the more unusual deals occurred in western Canada, where building products maker PFB Corp. bought the specialty styrenic resins business of Nova Chemicals Corp. Both firms are based in Calgary, Alberta. PFB had been a substantial customer of the Nova business.
A consolidation deal also hit the resins distribution market in the first half when Ravago Americas bought Amco Plastic Materials Inc., a distributor that also does some compounding work.
Ridenour said about half of the deals his firm now is working on involve compounders. Potential buyers also are asking about investing in monomers and other plastic feedstocks because of the cost advantage provided by newfound supplies of natural gas throughout North America, he said.