The number of global plastics materials-related M&A deals declined in 2016, as fewer opportunities presented themselves to buyers.
Based on processing sector, the number of resin, color and compounding deals fell 17 percent to 45 during 2016, according to financial firm P&M Corporate Finance of Southfield, Mich. Looked at by product segment, the number of resin deals also slipped 10 percent to 44.
Materials deals totals for 2015 and 2016 don't look as good in comparison to totals for 2013 and 2014 which were “high years,” according to P&M Managing Director John Hart. “In 2016, there were fewer materials deals to be had,” he said.
Major materials buyers such as resin distributor M. Holland Co. of Northbrook, Ill., also may have been out of the market temporarily after accomplishing much of their recent strategy, according to Bill Ridenour, president of Polymer Transaction Advisors Inc. in Foxfire, N.C. PTA did some acquisition work for M. Holland in recent years.
Financial pro Andrew Petryk at Brown Gibbons Lang in Cleveland cited Celanese Corp.'s purchase of Italian compounder So.F.Ter Group as an example of a quality materials deal that took place in the second half of 2016.
No purchase price was disclosed in that deal, which gives Dallas-based Celanese a larger presence in compounds based on engineering resins and thermoplastic elastomers for multiple markets. The two firms announced the deal in October at the start of the K 2016 trade show in Düsseldorf, Germany.
Another “marquee transaction” of the second half of 2016, according to P&M, was German materials firm Lanxess AG buying U.S.-based Chemtura Corp., a maker of flame retardants and lubricant additives, for $2.7 billion.
Ravago Group and its Ravago Holdings Americas unit were incredibly active in 2016 M&A, making a total of six deals, including four in the second half of the year. Most recently, the firm — a global distribution giant that also has recycling and compounding businesses — in December purchased Pacific Coast Chemicals of San Francisco for an undisclosed price. Plastics-related products distributed by PCC include pigments, light stabilizers, titanium dioxide, polyurethane dispersions and silicones.
PolyOne Corp. of Avon Lake, Ohio — another frequent M&A participant — in August paid $85.5 million to acquire two composites businesses from Gordon Holdings Inc. Gordon Composites makes high-strength profiles and laminates for sports equipment, office furniture and other markets. Polystrand is a maker of reinforced plastic composites.
Polystrand and Gordon Holdings both are based in Englewood, Colo. PolyOne will combine the two businesses into a new Advanced Composites platform that will be part of its Specialty Engineered Materials (SEM) business unit.
And materials maker Ineos Olefins & Polymers USA raised some eyebrows in November when it acquired pipe maker WL Plastics Corp. The deal gave Houston-based Ineos it a “captive” downstream customer of its increasing polyethylene production.
Fort Worth, Texas-based WL has more than 500 million pounds of annual high density PE pipe production at plants in Kentucky, South Dakota, Utah, Texas and Wyoming. Ineos is in the process of adding almost 1 billion pounds of new HDPE capacity in LaPorte, Texas, through a joint venture with Sasol Ltd.
Looking to 2017 plastics materials M&A, market veteran Phil Karig, managing director of the Mathelin Bay Associates consulting firm in St. Louis, said that “relative bargains” might be found in the recycling/compounding space, where substantial new PE capacity is expected to pressure recycler margins.