Other industry executives recently interviewed by PN also said they were keeping an eye on M&A.
Longtime industry consultant Bill Ridenour, president of Polymer Transaction Advisors Inc. in Foxfire, N.C., said his firm was working on three deals. He said the materials M&A market "could be moving away from being a seller's market for compounders" because of the number of deals completed in recent years.
"The conditions of buyers and sellers are changing," Ridenour said. "There could be a drop-off in buyers if they can't find good companies."
"There's a lot of private equity money still available, but good, smaller companies will be more difficult to find," said Suresh Swaminathan, president of Teknor Apex Co. in Pawtucket, R.I. "And you have to wonder if the effects of COVID-19 will affect companies' balance sheets."
Aurora Plastics of Streetsboro, Ohio, "will continue to look for acquisitions," CEO Darrell Hughes said. "There have been some slowdowns that have affected buyers and sellers, but things are starting to clear."
"There are still a lot of small companies in masterbatches, but the question is what their value is," said Phil Karig, managing director of consulting firm Mathelin Bay Associates LLC in St. Louis. "They might only have one or two extrusion lines, but there's an almost unlimited amount of money available in private equity."
The M&A market slowed when the pandemic first hit because it was difficult for companies to assess long-term valuations, according to Larry Shaw, chief commercial officer at Geon Performance Solutions in Westlake, Ohio. Geon is the renamed PolyOne business acquired by SK.
"You couldn't sell a company based on 2019 valuations," he said. "But now the M&A world is opening back up and there are going to be a lot of opportunities."
Other compounding deals of 2020 so far have included:
• Houston-based Ascend Performance Materials — a leading maker of nylon 6/6 resins and compounds also owned by SK — completed a pair of international deals.
The firm first acquired Italian materials firms Poliblend and Esseti Plast GD from D'Ottavio Group. The deal included a manufacturing facility in Mozzate, Italy.
Ascend followed that deal by entering the Asian manufacturing field with the acquisition of a compounding plant in China that had been operated by NCM (Changshu) Co. Ltd. and Tehe Engineering Plastic (Suzhou) Co. Ltd. The firm bought the plant, located about 60 miles outside of Shanghai.
The plant operates two twin-screw extrusion lines and has room for growth. It covers about 200,000 square feet, including warehousing space. Because of COVID-19 travel restrictions, Ascend's U.S.-based team wasn't able to visit the plant before making the deal. Company staff in Asia visited the plant.
• Thermoset molder and compounder Mar-Bal Inc. purchased Lattice Composites LLC, a Riverside, Calif.-based epoxy and polyester compounder. Mar-Bal will merge Lattice with its AltraSet Composite Technologies unit, and Lattice will move its advanced manufacturing equipment and staff to Mar-Bal's AltraSet plant in Chagrin Falls, Ohio. The deal will expand Mar-Bal's composite technologies to include Lattice's customized epoxy chemistry systems.
• Houston-based Ingenia Polymers Corp. acquired a toll compounding plant in Texas from LyondellBasell Industries. The plant in LaPorte had operated as Bayshore Industrial. LyondellBasell picked up the 100-employee plant in 2018 as part of its purchase of A. Schulman Inc. Ingenia officials said that the acquisition increases the firm's leadership in the polymer producer services market and expands its capability to serve the converter market.