Several compounding firms changed hands in the second half of 2024 even though materials mergers and acquisitions deal volume for the year was essentially flat.
P&M Corporate Finance of Southfield, Mich., tracked 41 resin, color and compounding deals in 2024, only one less than the total for 2023. That category accounted for 10 percent of all plastics M&A deals in 2024.
"Independent compounders had a very good year in 2024," said Keith Rodden, owner of consulting firm Compound Solutions LLC in Gallatin, Tenn. "They were able to give customers the service they were looking for."
In the compounding sector, Hexpol Group acquired an 80 percent stake in nylon compounder Piedmont Resin Supply LLC in a deal valued at $86 million. Hexpol of Malmo, Sweden, bought the majorty of Cartersville, Ga.-based Piedmont from owners Matt Griffith and Paul Daniel. Griffith founded Piedmont in 2013.
Piedmont is one of the largest independent nylon compounders in the U.S. Officials said the firm makes technical nylon compounds for the automotive, transportation and furniture industries.
Piedmont employs 60 and has annual sales of $60 million. Jan Wikström, Hexpol compounding president, said the acquisition "brings a portfolio of superior nylon compounds and strong market presence." Hexpol has an option to acquire the remaining shares, and the founders have an option to sell their remaining shares to Hexpol.
The deal is Hexpol's third in the U.S. in 24 months. In late 2023, it bought Chicago-area thermoplastic elastomer compounder Star Thermoplastic Alloys and Rubbers Inc. for $26.5 million. Star employs 30 and has annual sales of about $20 million. In late 2022, Hexpol acquired compounder McCann Plastics LLC of North Canton, Ohio, for $120 million. McCann employs 100 and makes materials for rotational molding and other applications.
Hexpol now operates 21 sites in the U.S. with plastics, rubber and TPE compounding. The publicly traded firm posted sales of just over $2 billion in 2023.
In other second-half compounding deals:
• Materials maker Techmer PM LLC acquired OptiColor Inc. of Huntington Beach, Calif., for an undisclosed price. Techmer CEO Mike McHenry said his firm will consolidate OptiColor's Huntington Beach location into Techmer's larger facility in Rancho Dominguez, about 25 miles away. All of OptiColor's machinery and equipment will move to Rancho Dominguez, and employees are expected to move to the new site as well.
McHenry described OptiColor as "a selective acquisition with new technology and markets." He added there was "very little overlap" in markets and customers served by Techmer and OptiColor.
Techmer will continue to seek out selective acquisitions, McHenry said: "We're still out there looking for opportunities."
OptiColor owner Jennifer Bryan will join Techmer as vice president of technical sales for optics, laser, lighting and sheet. She's been with OptiColor since 2012 and became president and CEO when she acquired the company in 2021.
OptiColor is a producer of color compounds and concentrates that employs 35 at a 22,000-square-foot location. It has annual sales of between $10 million and $15 million.
OptiColor specializes in compounding custom concentrates, pre-colored materials and specialty dyes into transparent, translucent, opaque, clear, white and color products. Those materials then are used in performance eyewear, military lasers and sustainable lighting.
The acquisition was Techmer's second in less than 18 months. In July 2023, the firm acquired color and additive compounder Advanced Color Technologies LLC of Dalton, Ga.
• Materials firm Color Master Inc. expanded its business model by acquiring resin supplier Rainmaker Polymers LLC. Warsaw, Ind.-based Rainmaker distributes generic grades of polyethylene and other commodity resins. The firm also sells compounds and concentrates that are toll compounded for Rainmaker by other firms.
Rainmaker was founded in 2007 by John Urschalitz and Lee Luckasevic, both of whom had management experience at compounder Polycom Huntsman.
CMI makes color and additive concentrates at its headquarters in Butler, Ind., and PVC compounds at a plant in Kendallville, Ind. Terms of the deal were not disclosed.
CMI President Kyle Skaggs said the acquisition allows CMI to enter resin distribution and other large-volume markets. "These were new markets that we couldn't get into in the past," he said. "This [deal] gives us the opportunity to take the middle man out."
• Italian investment firm Investindustrial acquired Delta Tecnic SA and plans to expand the masterbatch supplier via additional acquisitions. Delta Tecnic is based in Barcelona, Spain. The firm has two plants there and one in Mexico.
Delta Tecnic is focused on custom color and additive masterbatch concentrates. It supplies several end markets including wire and cable, automotive and energy. The firm was owned by founders Salvador Torras and Martí Baqués and other shareholders. In 2023, Delta Tecnic posted annual sales of about $65 million and the company had more than 200 employees
Investindustrial is an Italian investment firm with plastics holdings including Arterex and Guala Closures. It previously owned PVC supplier Benvic, and it recently bought auxiliary equipment supplier Piovan SpA. Investindustrial officials said they plan to accelerate Delta Tecnic's international expansion, targeting acquisitions across Europe, North America and Asia.
• Based on dollar value, the biggest deal of the second half of 2024 took place when Abu Dhabi National Oil Co. (ADNOC) bought materials giant Covestro AG in a deal valued at nearly $13 billion. Leverkusen, Germany-based Covestro signed an investment agreement with the United Arab Emirates' oil company for a public takeover for all outstanding shares at a price of almost $13 billion.
Covestro said in a statement that "there are no plans to sell, close or significantly reduce Covestro's business activities as part of the transaction." In the investment agreement, ADNOC undertakes not to initiate any of these activities.
Covestro is a global supplier of polycarbonate resins and films, thermoplastic polyurethane, PU materials and foams, and other specialty chemicals and materials. The firm employs around 17,500 worldwide and posted sales of $14.9 billion in 2023. Like many other producers, Covestro's margins have been under strain from a combination of weak demand and price pressure from low-cost imports.
Two second-half deals also involved resin distributors.
Global distribution firm Vinmar Group acquired the team and some assets of e-commerce firm BluePallet and renamed the business Vailent.
Officials with Vinmar in Houston said Vailent is "an innovative digital platform provider" for the plastics and chemicals industry. They added that the acquisition will operate as a subsidiary of Vinmar focused on deploying digital commerce technologies across Vinmar's polymer and chemical distribution businesses.
"We look forward to sharing this new capability with our suppliers and customers," Vinmar CEO Vishal Goradia said.
Vailent President Patrick Salome, formerly of BluePallet, added the acquisition "marks a significant inflection point for our business that will propel us to new levels of innovation and growth."
Vinmar first invested in Austin, Texas-based BluePallet in 2021. The acquisition is Vinmar's third in the last three years. In early 2023, the firm acquired controlling interest in Syncot Plastics LLC, a recycler based in Belmont, N.C. In 2022, Vinmar bought recycler Green World Compounding of Spain.
Materials distributor Tricon Energy of Houston acquired eXsource, a specialty polymer distribution business based in Australia and New Zealand. Tricon bought eXsource from Qenos Pty. Ltd., which is in the process of shutting down.
Tricon CEO Ignacio Torras said the acquisition "adds new geography to the range of services we offer to our customers and suppliers, and expands our market position in Australia and New Zealand." As part of the deal, Tricon will acquire inventory, receivables and the eXsource brand. eXsource employees will join Tricon as part of the transaction.
Qenos formed eXsource in 2017 to sell a range of polymers, and the distribution company expanded to New Zealand in 2019.