Materials deals take slower pace in second half of 2022

Several materials deals managed to wrap up in a slower second half of 2022 for plastics mergers and acquisitions, including a major resin distribution transaction involving Avient Corp.

Avon Lake, Ohio-based Avient sold its resin distribution unit — one of the largest in North America — to an affiliate of private equity firm HIG Capital for $950 million in cash. Avient had announced plans to sell the unit earlier in the year.

It posted 2021 sales of $1.63 billion and distributes resin and compounds for 21 suppliers, including Dow Inc., BASF SE and LyondellBasell Industries.

"As expected, there were multiple buyers interested in acquiring the distribution business, and it was a competitive process," Avient Chairman, President and CEO Robert Patterson said. Avient is one of the world's largest concentrate makers and one of North America's largest compounders. The firm employs more than 8,000 worldwide and posted total sales of $4.8 billion in full-year 2021.

Miami-based HIG has made numerous plastics investments over the years. In May, the firm sold materials firm Valtris Specialty Chemicals to SK Capital for an undisclosed price. Independence, Ohio-based Valtris makes polymer additives and specialty chemicals.

The sale did not surprise market watchers. The distribution unit no longer seemed to fit the specialty strategy that Avient, formerly PolyOne, had been following for several years. This was evident by Avient announcing on the same day its purchase of Royal DSM's protective materials business — including Dyneema-brand fiber — for nearly $1.5 billion.

In an email, Cathy Dodd, CEO of Formerra, formerly Avient Distribution, said that "together with my leadership team, I believe HIG will provide us with a springboard to build on our growth, ultimately benefiting our customers and supplier partners."

Avient predecessor M.A. Hanna Co., which became PolyOne following a merger with Geon Co. in 2000, formed the distribution unit beginning in the mid-1980s by acquiring and combining regional distributors Plastic Distribution Corp. of Ayer, Mass.; Bruck Plastics Co. of Romeoville, Ill.; and Fiberchem Inc. of Seattle into a single business.

In other noteworthy materials transactions:

• Covestro sold its additive manufacturing business to Stratasys Ltd. for $43.8 million. Officials with Covestro in Leverkusen, Germany, said that with the sale, the firm "continues its portfolio optimization … to position itself even more efficiently in the market and … to place greater focus on its extensive offering for customers in its core industries."

The sale includes employees, R&D facilities, production assets and offices in the Netherlands, Germany, the U.S. and China. The business offers material solutions for polymer 3D printing processes and includes products from the resins and functional materials business acquired from DSM in 2021, including the Somos and Addigy brands. Stratasys is a leading 3D printing firm based in Rehovot, Israel. The firm supplies 3D printers, polymer materials, software and parts.

• In market intelligence, News Corp. completed its $295 million cash deal for the Base Chemicals business — including a well-known plastics pricing and consulting unit — of S&P Global Market Intelligence. The business will operate under the name Chemical Market Analytics by OPIS, a Dow Jones Co.

News Corp. first announced the acquisition of OPIS (Oil Price Information Service) and related assets from S&P Global and IHS Markit in February. The deal resulted from the United Kingdom Competition and Markets Authority's request that IHS Markit divest Base Chemicals and OPIS as part of the S&P Global and IHS Markit merger, which was completed in February.

• Techmer PM LLC, one of North America's largest compounders and concentrate makers, now has a new majority owner for the second time in less than three years. Private equity firm Gryphon Investors of San Francisco bought a majority stake in Clinton, Tenn.-based Techmer for an undisclosed price. Techmer management, including founder John Manuck, and investment firm SK Capital will retain minority stakes in the firm.

Manuck, who began his plastics career in 1969 at a resin plant operated by Monsanto Inc. in Massachusetts, said he will continue to have a "more strategic role" with Techmer. "I'll be working on long-term projects," he added. "I'm better at big-picture stuff at this point in my career."

New York-based SK bought a majority stake in Techmer from Manuck and business partners Rehrig Pacific and Tokyo Ink in July 2020. Manuck founded Techmer in 1981. The firm makes engineered compounds and color and additive concentrates for plastics and fibers.

CEO Mike McHenry will continue to lead Techmer. "The Techmer team has significantly improved the overall business performance in a very challenging market environment," McHenry said.

Techmer's U.S. plants are in Clinton; Rancho Dominguez, Calif.; Wichita, Kan.; Dalton, Ga.; New Castle, Del.; and Batavia, Ill. Its Mexican plant is in Querétaro. The firm employs more than 600. Since 2014, Techmer has been named to Plastics News' Best Places to Work list six times, most recently in 2021. The firm is one of North America's 30 largest compounders and concentrate makers, according to PN data.

• Compounders Aurora Plastics LLC and Enviroplas Inc. merged to create a larger company with a broader product offering. Officials with Aurora in Streetsboro, Ohio, and with Enviroplas in Evansville, Ind., said both firms "share a commitment to being their customers' first choice … and can now offer customers a broader product portfolio backed by industry-leading customer service."

"Enviroplas brings an exciting platform expansion in near-product adjacency," Aurora CEO Darrell Hughes added. Enviroplas CEO and founder Jim Stratman will remain a substantial shareholder and continue to lead growth as president of Enviroplas, which will be Aurora's engineered polymers business unit, reporting to Hughes.

Enviroplas' leadership team and employee base will continue in their current roles. The firm was founded in 1992 and operates out of two sites in Evansville.

• Materials firm Hallstar Innovations Corp. purchased a plastics additives feedstocks plant in Greensboro, N.C., from Lanxess AG. The Greensboro plant makes ester materials that are used in brominated flame retardants and phthalate-free plasticizers.

Hallstar Chairman and CEO John Paro said the addition of another North American manufacturing plant "gives our customers even more supply security and our company even greater potential for growth."

The footprint of the Greensboro plant is similar to that of Hallstar's plant in Bedford Park, Ill., but with different capabilities and complementary assets, according to Chief Operating Officer Carmen Masciantonio.

Hallstar was formed in 1986 and has grown through several acquisitions. The firm's products include industrial esters and plasticizers. Lanxess of Cologne, Germany, is a maker of specialty chemicals and plastics that employs 14,900. The firm posted sales of around $6 billion in 2021.

• In a sustainability deal, nylon 6/6 resin maker Ascend Performance Materials purchased a majority stake in California-based carpet recycler Circular Polymers LLC. Lincoln-based Circular recycles post-consumer, high-performance polymers including nylons 6 and 6/6, polypropylene and PET. The business has been renamed Circular Polymers by Ascend.

Circular reclaims and reprocesses post-consumer carpet via a unique technology and has redirected about 85 million pounds of waste from landfills into new goods since 2018. The firm employs about 60 at a plant in Lincoln.

In a news release, officials with Houston-based Ascend said the deal provides the firm with a consistent supply of high-quality post-consumer materials for its ReDefyne-brand sustainable nylon resins, which it launched at the recent K 2022 trade show. Ascend has committed to reducing its greenhouse gas emissions by 80 percent by 2030.

Circular Polymers founder and CEO David Bender will stay on as CEO and will own the remainder of the company. "Since 2018, we have focused on improving the sourcing and processing of post-consumer high-performance polymers," Bender said. "Having Ascend on board will accelerate our growth and ensure these materials go back into new long-term, high-performance applications."

Ascend ranks as a global leader in nylon 6/6 resins and compounds. The firm has annual sales of more than $3 billion and is a unit of New York-based investment firm SK Capital Partners.

• Sweden-based Hexpol Group signed an agreement to acquire compounder McCann Plastics LLC from the McCann family for $120 million. McCann, which specializes in niche compounds for rotational molding and other applications, invested "substantially in capacity and technology" over the last few years to meet the increased demand for its products, officials said.

"McCann has a strong position within its market niche that complements and widens our customer offer," said Jan Wikström, president of Hexpol Thermoplastic Compounding. "The company is well invested with high competence in specialized thermoplastic compounds."

North Canton, Ohio-based McCann has two Ohio locations with 100 employees. Its main end markets are general industry, agriculture and the fast growth segment of specialized cooling boxes. Hexpol, based in Malmö, has 19 sites in the U.S. with thermoplastics, thermoplastic elastomer and rubber compounding.

• Prism Worldwide LLC, which recycles waste tires into new elastomers, acquired CRC Polymer Systems Inc. The acquisition of CRC deepens Kirkland, Wash.-based Prism's capacity for product development, compounding, blending and distribution through North America, particularly in the U.S.

By combining Prism's upcycled polymers with CRC's propriety compounds, Prism believes it has the potential to provide customers with new, more sustainable product offerings. Sodus, N.Y.-based CRC supplies compounds, resins and color/additive concentrates. Its facility, located just outside of Rochester, houses a compounding plant, pilot plant and materials lab for product development.

Prism makes polymers from ground tire rubber. Its products have found application in the asphalt, thermoplastic elastomer and polymer markets.

• Röhm GmbH acquired the Functional Forms business of Saudi Basic Industries Corp. (Sabic) for an undisclosed price. The Sabic business is a major supplier of sheet made from the firm's Lexan-brand polycarbonate. Officials with Röhm in Darmstadt, Germany, said PC sheet "is an ideal complement to [Röhm's] acrylic glass brands Plexiglas and Acrylite, creating a global leader in the transparent sheets and films segment."

Röhm is owned by Boston-based private equity firm Advent International. Advent Managing Partner Ronald Ayles said the acquisition of the Sabic unit "is a unique opportunity for Röhm to build a global leader in this attractive segment."

The Sabic unit employs 700 and has operations in 19 countries and through various production sites strategically located across all continents. Combining the unit with Röhm's existing sheet and film business will create a combined business with annual sales of more than $735 million.

The Sabic Functional Forms business is headquartered in Mount Vernon, Ind. Sheet and film products made by the combined business are used in building and construction, consumer electronics, medicine, aviation and other industries. Röhm employs 3,500 worldwide. The firm is a major producer of methyl methacrylate and related materials.