M&A interest in plastics materials firms remained high in the first half of 2019.
Polymer Transaction Advisors Inc. of Foxfire, N.C., has worked on three compounding deals and one recycling deal so far in 2019, according to President Bill Ridenour. The number of resin compounding deals "was up by a large percentage" in the first quarter, added David Evatz, managing director with Stout Investment Banking in Chicago.
"Buyers are looking for companies that make more highly engineered and complex compounds," he said.
The number of deals in the resin/color/compounding sector increased from 20 in the first half of 2018 to 22 in the first half of 2019, according to P&M Corporate Finance in Southfield, Mich. Those deals made up 13 percent of all first-half plastics transactions.
In a first-half materials megadeal, Saudi energy giant Saudi Aramco signed an agreement to acquire a 70 percent majority stake in petrochemicals and chemicals company Saudi Basic Industries Corp. for $69.1 billion.
The shares are being purchased from the Public Investment Fund of Saudi Arabia in a private transaction. Headquartered in Riyadh, Sabic — a major producer of polycarbonate and various specialty resins — had a net profit of $5.7 billion in 2018, on $45 billion sales.
Another multibillion-dollar materials deal saw Evonik Industries AG of Germany sell its methacrylates business to private equity group Advent International of Boston for $3.4 billion. The deal covers Evonik's methacrylates, acrylic products and CyPlus business lines as well as some methacrylate resins.
The businesses being sold cover 18 production sites and 3,900 employees worldwide, with annual sales of around $2 billion. The sale price represents a multiple of 8.5 times the businesses' EBITDA.
Evonik officials said divesting those businesses within its systematic strategy would sharpen its focus on specialty chemicals, which are less cyclical. Advent has had more than 30 financial investments in the chemical industry globally, including European packaging firms Faerch Plast Group A/S, HT Troplast and resin seller BIP Group.
Evonik also was buyer in the first half, acquiring Structured Polymers Inc., an Austin, Texas-based maker of powered polymers used in 3D printing. The deal provides Evonik access to patented technology that officials said will allow the company to expand its portfolio of specialty polymer powders in the additive manufacturing market.