The medical market continued to draw plastics M&A investment in the second half of 2015, spearheaded by Berry Plastics Group Inc.'s blockbuster $2.45 billion cash deal for specialty materials maker Avintiv Inc.
“Medical plastics deals tend to get higher multiples,” said Andrew Petryk, managing director and principal with financial firm Brown Gibbons Lang & Co. in Cleveland. “They have more technologically advanced products, longer-life products and are more embedded with their customer base.”
An extreme example of interest in medical plastics came from Terry Minnick, owner of the Molding Business Services consulting firm in Florence, Mass. A medical injection molder in New York state that MBS is representing recently drew 94 interested buyers, he said.
The August deal for Avintiv moved Evansville, Ind.-based Berry outside of its core plastics packaging business and vaulted the company into the Fortune 500. Company officials described the deal as transformational for Berry in terms making it less dependent on packaging, moving it into the fast-growing health and hygiene markets, and giving it a significant presence outside of North America.
The seller was Blackstone Group LP, a private equity firm that created Avintiv by combining the products, technologies and services of four portfolio companies focused on infection prevention, personal care and high performance solutions. The Charlotte, N.C.-based company went by the name PGI Specialty Materials Inc. until June when it was rebranded.
Avintiv has sales of $2.1 billion with 45 percent in hygiene products like diapers and feminine care and 25 percent from personal and industrial wipes and health care items like medical gowns, surgical masks and wound care. The purchase gives Berry annual sales of more than $7 billion.
Berry paid a purchase multiple of 6.9 times adjusted EBITDA for Avintiv, including achievable synergies put at $50 million, according to a company presentation about the deal. The transaction is scheduled to close by the end of 2015.
Another sizable medical plastics deal tracked by Plastics News in the second half of 2015 was medical disposables producer Gerresheimer AG's $725 million purchase of Centor US Holding Inc., a former Rexam plc business based in Perrysburg, Ohio.
Centor is the leader in the U.S. prescription plastic vial retail market for oral drugs. The August deal launched Gerresheimer — based in Düsseldorf, Germany — into plastic injection molded packaging in the United States. Centor employs 220 and has 2014 sales of about $167 million.
Gerresheimer has annual North American sales of almost $300 million, but those sales were mainly in glass packaging and other drug delivery devices such as inhalers. Gerresheimer already is experienced in making plastic medical packaging elsewhere and will combine that experience with Centor's expertise in molding. The deal also puts Gerresheimer in the retail market of pharmacies and supermarkets, a new customer base for the company, which has mostly sold directly to drug companies.
Gerresheimer's purchase price values Centor at about 9.8 times earnings before interest, taxes and amortization. It will integrate the newcomer into its Plastics & Devices Division.
“There's still interest in medical for a lot of reasons,” said Bill Ridenour, president of Polymer Transaction Advisors in Wapiti, Wyo. “A lot of their products are price-protected and as a result aren't under pricing pressure. And it's still a good place to invest because profit margins are high.”
Other medical deals covered by Plastics News in the second half of 2015 included:
• Atlanta-area specialty plastics processor Pexco LLC acquiring medical processor Precision Extrusion Inc. in its second medical plastics deal in three years. Precision, based in Glens Falls, N.Y., was founded in 1991 and specializes in medical tubing and catheters. It works with nylon and nylon copolymers, polyurethane, polyetherimide, fluorinated ethylene propylene, polycarbonate and PEEK. Alpharetta, Ga.-based Pexco has been in expansion mode since being purchased by Odyssey Investment Partners LLC of New York in August 2012.
• Injection molder Technimark LLC buying Ci Medical Technologies Inc. in a move that will jumpstart the company's presence in the health care field. Ci Medical, founded in 1971 and formerly known as Classic Industries Inc., is a Latrobe, Pa.-based maker of specialty medical components.
Technimark, owned by Pritzker Group, is buying Ci Medical from private equity firm Altaris Capital Partners LLC of New York for an undisclosed price. Asheboro, N.C.-based Technimark adds five locations and 550 employees through the deal and now has 14 sites around the world.