Plastics mergers and acquisitions activity was solid in the second half of 2018 and is expected to remain so in 2019, but there are more storm clouds on the horizon than in previous years.
Financial firm P&M Corporate Finance of Southfield, Mich., tracked 163 global plastics and packaging deals in the second half. That's only one less than the first half of the year but a drop of 17 — or more than 9 percent — from the second half of 2017.
For full-year 2018, P&M tracked 327 such deals, down 32 from 2017, for a drop of almost 9 percent. PMCF Managing Director John Hart said that 2017 may end up being viewed as a "spike year" in number of deals before the market returned to a more steady average.
"We didn't see a slowdown of interest in 2018," Hart said. "The first quarter was slow and that affected the total for the whole year, but overall interest in plastics and packaging deals was strong."
Based on end markets, the number of deals tracked by PMCF in food/beverage, construction and automotive each saw double-digit declines in 2018. The consumer market reversed that trend, recording 17 more deals than in 2017, a gain of 40 percent.
For processing sectors, sheet and thermoforming deals grew by 39 percent in 2017, with 11 additional deals reported. The number of injection molding deals, however, slumped 19 percent with 20 fewer deals.
By product segment, custom molding recorded a massive loss in 2018, with 46 fewer deals for a slide of 61 percent. That decline was tied into a drop in automotive deals. The number of building products deals also decreased 28 percent with 10 fewer deals. Better results were seen in industrial — up 40 percent with 21 more deals — and flexible packaging, where 13 more deals produced 26 percent growth.
In spite of the lower overall deal total, 2018 was in line with results from 2013, 2015 and 2016, according to PMCF data.