Uncertainty about the global economy and the U.S. presidential election don't seem to be having any impact on plastics mergers and acquisitions.
In the third quarter of this year, financial firm Stout Risius Ross of Chicago tracked 117 global plastics M&A deals. That ties a five-year quarterly high for plastics deal volume. The other quarter with 117 deals was the second quarter of 2016 — the previous three-month period.
And the next-busiest quarter for plastics M&A deals in the last five years? The first quarter of 2016, when 115 deals were made, according to SRR.
Overall, five of the six busiest quarters for plastics M&A have come since mid-2015. The only quarter that was even comparable, according to SRR, was the fourth quarter of 2012 with 113 deals.
Automotive plastics deals were up 39 percent in the first nine months of 2016, with industrial plastics deal volume up 29 percent and the number of medical plastics deals up 21 percent.
Earnings multiples paid for plastics firms also remain high, with medical firms seeing multiples of just over 16 in 2016 and flexible packaging, rigid packaging and building products each seeing multiples of between 10 and 11, SRR officials said in a recent report.
“In the plastics industry, there continues to be differences in valuation levels depending on end markets served, although all segments continue to maintain relatively high historical valuation levels,” SRR managing director David Evatz wrote in the report. “Five out of eight plastics industry sectors that SRR tracks are up for the year.”
The report adds that plastics M&A activity is expected to remain strong through the end of 2016. Hopefully, this bodes well for 2017 as well.