PolyOne went from seller to buyer in big second-half deals

With two major deals that reshaped the company, PolyOne Corp. had the leading role in plastics materials mergers and acquisitions in the second half of 2019.

In August, Avon Lake, Ohio-based PolyOne sold its Performance Products and Solutions unit to private equity firm SK Capital Partners of New York in a $775 million all-cash deal. PP&S included a major PVC compounding business and had annual sales of around $700 million.

The PP&S business covered Geon-brand PVC compounds, which were one of PolyOne's oldest legacy businesses. The materials first were made by rubber supplier B.F. Goodrich, which launched production of PVC resin and related compounds and end products in the 1920s before it began selling the materials to outside customers in the 1940s.

Then with the calendar about to flip to 2020, on Dec. 19 PolyOne announced plans to acquire the global masterbatch concentrates business of Clariant AG for $1.45 billion. The agreement followed months of speculation between Muttenz, Switzerland-based Clariant and Saudi Arabian conglomerate Sabic.

The PolyOne-Clariant deal is set for completion in the third quarter and values the Clariant business at about 11.1 times the annual earnings before interest, taxes, depreciation and amortization (EBITDA). PolyOne used some of the proceeds from the PP&S deal to fund its purchase of the Clariant business.

On a Dec. 19 conference call, PolyOne CEO, President and Chairman Robert Patterson said that the Clariant deal is "truly transformational" for PolyOne and will make the firm a $4 billion business that will be "truly global."

Market watchers Kevin Hocevar and Bill Ridenour also approved of the deal. Hocevar, a market analyst with Northcoast Research in Cleveland, said in a research note that "in our opinion, [Clariant's masterbatch business] has always been the holy grail for PolyOne, as it combines the company with its largest color/additive competitor … creating the unmatched global leader in the space."

Plastics M&A veteran Bill Ridenour said in an interview with Plastics News that the PolyOne-Clariant deal is the best acquisition that PolyOne has made since its 2000 formation from the merger of Geon Corp. and M.A. Hanna Co.

"This acquisition makes PolyOne the overwhelming leader in specialty masterbatches in the world," he said. "No one can touch them."

Ridenour, president of Polymer Transaction Advisors in Foxfire, N.C., added that PVC "had been a detractor" for PolyOne, whereas the Clariant unit "will be an enhancer with long-term value."

The PolyOne-Clariant deal includes the sale of Clariant's global masterbatches business, with $1.1 billion in annual sales. Major markets served by the Clariant business include consumer, packaging and health care.

With the Clariant operations, PolyOne will add 46 manufacturing sites and technology centers in 29 countries and about 3,600 employees. They will be added to PolyOne's Color, Additives and Inks segment.

PVC buyer SK, meanwhile, had become a major player in plastic additives through its acquisitions of part of Chemtura in 2013 and of SI Group in 2018. SK had operated the Chemura businesses as Addivant. The combined additives firm operates as SI Group.

Other major second-half materials deals included:

• Essex, England-based Synthomer plc buying specialty chemical company Omnova Solutions Inc. in a deal worth about $455 million. Synthomer's offer of $10.15 per share was a premium of 58 percent to Beachwood, Ohio-based Omnova's closing price of $6.42 per share at the time the deal was announced.

• Domo Chemicals GmbH acquired the European specialty nylon business of Solvay for $334.2 million. The deal allowed Brussels-based Solvay to complete the $1.78 billion sale of its larger overall nylon unit to BASF SE of Ludwigshafen, Germany. The Domo-Solvay transaction includes manufacturing sites in France, Spain and Poland.

• Materials firm RTP Co. of Winona, Minn., acquired the Zeotherm-brand thermoplastic vulcanizate product line from Zeon Chemicals LP. The deal includes all products sold globally under the Zeotherm TPV name. The Zeotherm acquisition "is just the latest step in our rapidly expanding thermoplastic elastomer business," RTP officials said.

• Global colorant provider Chromaflo Technologies Corp. made its second international acquisition in less than a year, buying Liquid Colours (Pty) Ltd. of South Africa for an undisclosed price. Officials with Ashtabula, Ohio-based Chromaflo said the deal "further enhances [the firm's] position in the sub-Saharan African region."

Liquid Colours' colorant dispersion division includes pigment dispersions and colorant technologies for decorative paint point of sale, in-plant systems, industrial coatings and other applications.

• Private equity firm PMC Capital Group LLC acquired expandable polystyrene resin maker StyroChem Canada Ltd. for an undisclosed price. Los Angeles-based PMC is buying the business from Tennenbaum Capital Partners LLC of Santa Monica, Calif., which had owned StyroChem for 11 years. StyroChem makes EPS grades used in foodservice, packaging, construction, casting and specialty applications at a plant in Quebec City. The business has annual sales of more than $100 million.

• In a major resin shipping deal, A&R Logistics Holdings Inc. acquired Plantgistix Holdings for an undisclosed price. The addition of Houston-based Plantgistix made A&R the resin industry's only logistics provider offering complete export solutions out of Houston, Charleston, S.C., and Savannah, Ga., according to company officials.

The acquisition was the second transaction for Louisville, Ky.-based A&R since the firm was acquired in May by Wind Point Partners, a Chicago-based private equity firm. In June, Wind Point acquired Blue Water Plastic Transport LLC of St. Clair, Mich.

• New York private equity firm The Jordan Co. acquired Polymer Solutions Group's Polymer Additives division — previously Flow Polymers of Cleveland — from fellow New York investment firm Arsenal Capital Partners. The sale comes after a hold period of close to four years.

• Two executives with resin distributor PolySource purchased the firm from Greg Jacobson, who founded the Independence, Mo.-based company in 2000. PolySource now is owned by President Grant John and Vice President Damien Couch. Jacobson "established a foresight for flawless service to the customer that could only be authenticated by the culture of the company," officials said. John and Couch have 32 years of combined experience.

• Global plastics and chemicals company Indorama Ventures Public Co. Ltd. grew its recycling operations in the U.S. by purchasing Green Fiber International Inc. of Fontana, Calif. The deal gives the company a recycling presence on the West Coast for the first time and it follows the purchase of an Athens, Ala.-based PET recycling facility by Indorama almost a year ago. Green Fiber adds almost 100 million pounds of PET recycling capacity per year for Indorama.