Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Plastics News China
  • Rubber & Plastics News
logo-pn-color
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • End Markets
    • FYI Charts
    • LSR World
    • Multimedia
    • NPE2021
    • K Show
    • Special Reports
    • Top materials of injection molders
      Recycled PET use by product category
      US PET, flexible packaging desintations
      Global fluropolymers additives market: CAGR
    • NPE exhibitors question handling of deposits for canceled trade show
      Exhibitors back NPE cancellation: ‘We couldn't take that risk'
      NPE2021 canceled as in-person event
      NPE reviews its options as pandemic prompts exhibitor to exit
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • What Keeps You Up At Night
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Polymer Points Live
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Videos
    • Galleries
    • Podcasts
    • CEO Issue
    • Best Places to Work
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
  • Opinion
    • The Plastics Blog
    • Kickstart
    • Heavy Metal
    • One Good Resin
    • BRICS and Plastics
    • All Things Data
    • Viewpoint
    • Perspective
    • Mailbag
    • Getting back on the road
      How long will it take for EVs to replace internal combustion engines?
      Watching, and hoping, for progress in 2021
      COVID-19 stories dominate 2020 headlines
    • Kickstart: Attention, Walmart molders
      Kickstart: No one said returning to school would be easy
      Kickstart: Best foot forward
      Kickstart: Heading back to the office ... sometime
    • Heavy Metal: Coronavirus edition, plus the work of working from home
      Don't put off succession planning
      What's a good gift for your cobot? Batteries?
      Here's some big ideas to mull over the holidays
    • Plaskolite wins 3M supplier award
      Green feet: Braskem partners with Dansko on bio-based clogs
      Curbell donates plastic sheet for prosthetics project in Ecuador
      Covestro volunteers build ramp for Ohio veteran
    • Climate debate in Washington increasingly includes plastic
      There was no choice but canceling NPE still a big deal
      The business case for producer responsibility
      Think divided government stalls plastics legislation? Think again
    • Thermoformers: Would you believe a 12 percent gain?
      Just how big is thermoforming in North America?
      Changing names for compounders embracing corporate branding
      Diversity the key to outperforming the market
    • Thermoformers: Would you believe a 12 percent gain?
      The benefits of getting social
      Rising Stars shine bright future on industry
      Getting back on the road
    • Perspective: Plastics manufacturers — a surprising contribution to sustainability
      Plastics industry business owners: Listen to your future workforce
      Perspective: ‘Fake news' of a different sort?
      Perspective: Making products in the USA is good for the planet
    • Mailbag: Additional fees for electric vehicles ‘unfortunate'
      Mailbag: Where's the plastics industry's response to critics?
      Mailbag: Manufacturers struggling to follow COVID-19 safety rules
      Modernizing recycling infrastructure will benefit businesses as well as the environment
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
    • Maintenance can ensure efficient blender operation
      Dosing: Perfect for adding color
      Blending vs dosing: What you need to know
      Going low or high: Comparing volume
    • Colors and custom compounds
      In the laboratory: Compounding solutions
      Recycling content: Resins going ‘green’
      Compounding: Glass and other fillers
    • Dryer maintenance: Don’t err with air
      Dryers: Options for a shop’s process
      Dryer installation: Going central?
      Resins: Hygroscopic or non-hygroscopic
    • Electric injection molding presses: Efficiency is key
      Hydraulic injection molding machines
      Proper maintenance can prevent downtime
      Hybrid injection molding machines
    • Purging Hot runners: Open or closed methods
      Purging extrusion machinery
      Purging extrusion blow molding machines
      Purging: Chemical, abrasive and non-abrasive
    • Controls, special applications boost production, profitability
      Robot maintenance key for smooth operation
      High-speed robots: A rapid way to increase efficiency
      Robots: Every shape and size
    • Maintenance: Key for efficiency
      Shredders: Plastic in pieces
      Safety first for size reduction
      Granulators: The right fit
    • Structural foam molding: Flexibility for processors
      Video: Structural foam molding
    • Mold inventory: How many molds does a shop have?
      Molds: Innovation
      Mold changeover: Saving time and money
      How molds work
    • Labor: Apprenticeships may provide answer
      Internships: Solving the skills gap in-house
      College training, programs
      Lean Six Sigma: Transforming business operation
  • Events
    • Plastics News Events
    • Industry Events
    • Livestreams/Webinars
    • Ask the Expert
    • Polymer Points Live
    • Reifenhäuser Technologies Livestreams
    • 2020 Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
    • Polymer Points Live - February 2021
      Polymer Points Live - January 2021
      Polymer Points Live - December 2020
      Polymer Points Live - October 2020
    • Plastics in Healthcare 2020
    • Plastics News Executive Forum
    • Plastics in Automotive
    • Plastics News Caps & Closures
    • Plastics in Healthcare
    • Women Breaking the Mold Networking Forum
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Data Store
  • Directory
  • More+
    • Classifieds
    • Digital Edition
    • Newsletters
    • Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Processor of the Year submissions
    • Sponsored By Ensign Equipment
      Filling Systems Customized for Any Process or Budget Need
      KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
      Sponsored By Mitsubishi
      Innovative new technology from Mitsubishi Engineering-Plastics Corporation helps reduce emission footprints
      Canon Virginia, Inc.
      Sponsored Content By Canon Virginia, Inc.
      Canon Virginia Inc. brings collaboration to the table
    • KraussMaffei
      Sponsored By KraussMaffei
      KraussMaffei Retools in US with investment from Parent Ownership
    • Sponsored By ENGEL Machinery
      Tailored maintenance for injection molding machines and robots
      Sponsored By ENGEL Machinery
      Improve maintenance efficiency with e-connect.monitor
      Sponsored By ENGEL Machinery
      Maximum precision for lowest shot weights
      Sponsored By ENGEL Machinery
      Even more cost effectiveness for small precision parts
    • Shell
      Sponsored By Shell
      Food and Beverage Trends Impacting the Polymer Industry
      Sponsored By Conexiom
      Use Sales Order Automation to free up time for CSRs to focus on customers, not manual entry
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
April 21, 2020 07:00 AM

Plastics M&A deals hampered by COVID-19

Frank Esposito
Plastics News Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Stout
    David Evatz, Stout

    Deal volume in plastics mergers and acquisitions has declined in 2020 because of the impact of COVID-19.

    The Investment Banking Group at Chicago-based Stout tracked 93 global plastics M&A deals in the first quarter of 2020, a level close to the average of the last several quarters. But Managing Director David Evatz said in a research note that "a number of factors are likely to result in a decline in M&A activity during second quarter of 2020 and possibly beyond."

    According to Evatz, these factors include declining company performance in certain sectors and potential lower valuations, as well as inability to travel and other challenging logistics around due diligence.

    "From a buyer's perspective, there continues to be significant equity capital available for transactions from private equity groups and certain strategic buyers, although many will likely be sidelined until there's clarity on the long-term economic impact of the COVID-19 crisis before jumping back into M&A," he said. "In addition, there's currently disruption in credit markets, which may result in reduced availability of debt financing for transactions.

    "We [also] are likely to see an increase in special situation transactions involving companies struggling with liquidity … and overall performance declines."

    Focusing on March, P&M Corporate Finance of Southfield, Mich., said that global M&A volume fell sharply in plastics and packaging for the month, with COVID-19 negatively impacting a large number of transactions in process.

    COVID-19 "has certainly had an unprecedented impact on the global economy, stock market performance and M&A activity in a very short time period, [and] plastics and packaging M&A was no exception," PMCF Managing Director John Hart said in a report.

    "Deals are still getting done in this environment, but it appears to be with companies that haven't been materially impacted by COVID-19," he added. "We expect to see lower M&A activity in plastics and packaging for the next couple of months as a result."

    The number of deals in the blow molding, injection molding and film sectors all experienced declines in March, according to PMCF, continuing a downward trend that started in February. Resin/Color and Compounding and Specialty were the only sectors not negatively impacted, both showing increased activity for the first quarter of 2020.

    Investment firm Mesirow Financial of Chicago said in a report that the impact of COVID-19 could cause "significant declines in both public and private M&A activity." Large companies with strong balance sheets and private equity firms — both of which often can pay cash — may look to buy at depressed valuations, officials said in the report.

    Liquidity concerns may result in forced sellers — either of entire companies or of business units — and hostile deal activity may also increase, they added.

    At MBS Advisors in Florence, Mass., partner Andrew Munson said that "a lot of in-process M&A deals have been put on the slow train or paused completely" because of COVID-19.

    "The automotive and appliance markets have been hurt and deals that were in process in these industries are likely to fall apart," he explained. "Construction and building products are likely to take a huge hit as well. I think it's going to take a long time for these industries to recover.

    "On the other hand, medical/health care and food packaging sectors have largely been unaffected and investor interest here hasn't changed much."

    Munson added that the lending market for lower middle-market M&A deals "is very tight at the moment … [which] should lower transaction multiples across the board and definitely hurts the ability to get deals done in the current environment."

    Andrew Petryk, managing director at Brown Gibbons Lang in Cleveland, agreed that although the automotive market "has been particularly hard hit," food packaging remains strong. He added that residential construction "is expecting to get hit hard" late in the second quarter and into the summer.

    A key point for plastics M&A during the COVID-19 crisis will be how long the U.S. economy will be hampered, according to Bill Ridenour, owner of Polymer Transaction Advisors Inc. in Foxfire, N.C.

    "If there's a quick return to business, we might return to normal because the economy had been so strong earlier in the year," he said. "A lot of plastics businesses are doing well in areas like medical, packaging, frozen food and pharmaceuticals."

    But Ridenour added that several M&A deals are on hold for various reasons, including restrictions on travel by states or companies or outside firms. Sellers' expectations for high multiples might lead to them not selling at all, he said, and distressed sales also could happen if plastics firms see negative financial results.

    Seventeen plastics firms that Ridenour is working with are seeking Small Business Administration loans during the crisis. He said that SBA loans "are good for workers as well."

    At Blaige & Co. in Chicago, Chairman and CEO Thomas Blaige said that buyers during the COVID-19 crisis "are still interested, as long as they can get credit and companies are performing well."

    He added that sellers "still want the same price" and that in some cases, banks and lenders "don't know what to do, which is leading to a flight to quality."

    Blaige described the packaging market as "a silver lining" during the crisis, with March sales at some firms that he's working with up 30-50 percent.

    Travel restrictions also are playing a role in deal deadlines.

    "People are trying to do virtual plant tours, but they still want to kick the tires," Blaige said.

    "Even if the economy reopens in a month or two, companies are going to need some time to reestablish their numbers, whether they're buying or selling," he added. "Private equity companies might be looking for bargains. Add-on acquisitions of companies with annual sales of $5 million to $50 million might be easier to do."

    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    logo-pn-color
    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber & Plastics News
    • Urethanes Technology
    • Plastics News China
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • What Keeps You Up At Night
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
        • Polymer Points Live
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • FYI Charts
        • Current FYI
      • LSR World
      • Multimedia
        • Videos
        • Galleries
        • Podcasts
      • NPE2021
      • K Show
      • Special Reports
        • CEO Issue
        • Best Places to Work
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
    • Opinion
      • The Plastics Blog
      • Kickstart
      • Heavy Metal
      • One Good Resin
      • BRICS and Plastics
      • All Things Data
      • Viewpoint
      • Perspective
      • Mailbag
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • Plastics News Events
        • Plastics News Executive Forum
        • Plastics in Automotive
        • Plastics News Caps & Closures
        • Plastics in Healthcare
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Livestreams/Webinars
      • Ask the Expert
      • Polymer Points Live
      • Reifenhäuser Technologies Livestreams
      • 2020 Caps & Closures Library
      • Plastics in Healthcare Library
      • Women Breaking the Mold Networking Forum Library
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Data Store
    • Directory
    • More+
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified
      • Digital Edition
      • Newsletters
      • Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Processor of the Year submissions