Private equity shoppers are still active in the plastics machinery world, but the surprise news that Hillenbrand Inc. is buying Milacron Holdings Corp. — both of them industrial companies traded on the New York Stock Exchange — signals the moves by big public companies to build plastics technology groups is far from over.
Other examples are Nordson Corp. and Barnes Group Inc., two diversified companies with plastics strategies that show confidence in the long-term future of the plastics industry.
Hillenbrand already owned major compounder extruder builder Coperion, as well as Rotex screening equipment and K-Tron material handling systems. All were part of its Process Equipment Group. Executives say creating and growing the plastics equipment group is an important way to diversify beyond Hillenbrand's 100-year-old Batesville Casket brand of burial caskets and cremation urns.
At the same time, they say the casket business is a steady income generator (insert your dark-humor joke here) that can offset the more cyclical capital machinery business.
Then came the surprise news July 12 that Hillenbrand was buying Milacron, making it a major global plastics machinery manufacturer. Milacron makes injection molding presses, extruders, structural foam machines, Mold-Masters hot runners and DME mold components, plus fluids for the metalworking sector.
Hillenbrand is paying around $2 billion in cash and stock.
It's the biggest acquisition story in years for the machinery sector. The plastics industry will be watching to see what happens.
So, once again, a publicly traded company is buying a plastics machinery business. Does that go against the tsunami of private equity money that has swept through some plastics sectors, including machinery?
Private equity firms do have a place in industrial machinery, and they certainly have plenty of money to make deals. Usually, private equity owns a company for a specific amount of time, then sells it to cash out and pay back the investors. Strategic buyers, on the other hand, tout their long-term outlook — they tend to buy and hold.
That may be a relief for employees, and Milacron has about 5,800 of them. Combined, Hillenbrand and Milacron are expected to generate annual sales of nearly $3 billion and have a total worldwide workforce of more than 12,000.
How does the Hillenbrand-Milacron combination compare with the other growing stockholder-owned machinery businesses?
• Nordson has assembled what it calls its Polymer Processing Systems business, including Xaloy screws and barrels, EDI flat dies and BKG pelletizers and melt palletizers. Nordson also has added some medical plastics processors.
• Barnes calls its plastics-related unit the Molding Solutions Group, built around Synventive, Thermoplay hot runners and Gammaflux hot runner controls, Otto Männer precision molds, Foboha cube molds and Priamus process control systems.
Last fall, Barnes announced it was building an automation group, too, starting with the acquisition of Gimatic srl, an Italian maker of end-or-arm tooling and sensors for automotive, packaging, health care, food and beverage and other markets.
Once the Hillenbrand deal for Milacron closes, expected in the first quarter of 2020, Hillenbrand officials said they will work to bring down debt before looking to buy more.
In the meantime, don't be surprised if Barnes and Nordson are more active in the deal-making arena. They may even be doing some shopping at the biggest plastics trade show in the world, K 2019, coming up Oct. 16-23 in Düsseldorf, Germany.
Bregar is a Plastics News senior reporter and author of the Heavy Metal blog. Follow him on Twitter @Machinerybeat25.