First Quarter 2015

Top News in
PLASTICS AND PACKAGING
M&A Quarterly
PLASTICS & PACKAGING
For additional information or inquiries, please
contact one of our team members:
John D. Hart
248.223.3468
[email protected]
Matt G. Jamison
248.223.3368
[email protected]
Ryan R. Shuchman
248.603.5372
[email protected]
Scott S. Rohlig
248.603.5232
[email protected]
Erik K. Wittbold
248.603.5397
[email protected]
www.pmcf.com
FIRST QUARTER 2015
PMCF Transaction Announcements
has acquired
has been acquired by
Packaging: Food and Healthcare
Packaging: Health and Beauty
Packaging: Food
Blow and Injection Molding
Company Sale to
Financial Buyer
Injection Molding and Metalizing
Company Sale to
International Buyer
Injection Molding and Decorating
Strategic Acquisition
Advisory
About PMCF
P&M Corporate Finance (“PMCF”) is an investment banking firm, focused exclusively on middle market transactions, with professionals in Chicago, Detroit, and across
the globe through Corporate Finance International associates. Our dedicated Plastics and Packaging Group has
deep industry knowledge and covers a wide range of processes including thermoforming, sheet and film extrusion, blow molding, injection molding, and resin and color
compounding. Offering a breadth of advisory services, the
Plastics and Packaging Group has helped clients worldwide meet their sale, acquisition, financing, and strategic
growth objectives.
JOHN HART
Managing Director
248.223.3468
[email protected]
RYAN SHUCHMAN
Investment Banking Services:
• Mergers & Acquisitions
• Sales & Divestitures
• Capital Raising
• Sale Planning
Vice President
248.603.5372
[email protected]
2
M&A Quarterly – Plastics & Packaging
Following the flurry of plastics and packaging M&A in Q4 2014, totaling 101 transactions, Q1 ‘15 transaction volume not surprisingly
reflected a more normalized trend. When reviewing Q1 ’15 deal volume, of 80 transactions, the level was in line with the quarterly
average of 80+ deals that have occurred in the last two years. The
healthy level of M&A activity was supported by continued private
equity interest, at 27 transactions, while strategic buyers also remained acquisitive with 53 deals through Q1 ’15.
With sustained volume near recent quarterly averages, the first
quarter of 2015 marks a strong start for plastics and packaging
M&A this year and an extension of the positive transaction environment. This is encouraging as 2014 was largely considered the most
active year for global M&A since 2007, driven by strong balance
sheets, low-cost debt, and steady organic growth, factors which
may continue through 2015. We believe that the plastics and packaging sector will likely remain a focus for strategic and financial
buyers given these robust market conditions.
Number of Deals
First Quarter 2015 Market Summary & Outlook
400
393
350
67
347
300
60
72
382
250
341
328
79
59
59
68
55
49
56
200
150
266
235
220
100
233
213
92
14
14
80
13
14
64
53
Q1 YTD ‘14
Q1 YTD ‘15
50
0
2010
2011
2012
Strategic
2013
2014
Financial Platform
Financial Add-On
Key Q1 2015 plastics and packaging M&A trends included the following:
Transactions by
Product Segment
• Despite experiencing a larger year-over-year decline in deal activity, strategic buyers remained the most acquisitive buyer segment, accounting for approximately 66% of first
quarter transactions, while private equity firms completed 14 and 13 add-on and platform acquisitions, respectively
Q1 YTD 2015
• Deal activity was flat or down across all major processing types through Q1 ’15; however,
transaction mix shifted as deals involving injection molders and film manufacturers both
became larger percentages of overall volume
• Packaging deals, including rigid, flexible, bottles, and closures, increased to account for
over a third of overall plastics & packaging M&A in the first quarter of 2015, after totaling
less than a quarter of Q1 ’14 deals
Rigid
Packaging
6%
Flexible
Packaging
15%
Flexible
Bottles
7%
Custom Molding
29%
• Stock market valuations increased significantly for publicly traded plastics businesses
in Q1 ’15, with average EV/EBITDA multiples up over a full turn, potentially reflecting a
continuation of attractive valuations for sellers
Closures
6%
Resin
14%
Industrial
19%
Consumer
1%
Building
Products
3%
Key transactions for the quarter included the following:
• Multi-billion dollar merger between MeadWestvaco (NYSE:MWV), which has a significant
plastic packaging business, and Rock-Tenn Inc. (NYSE:RKT)
Q1 YTD 2014
• A. Schulman Inc.’s (NasdaqGS:SHLM) acquisition of Citadel Plastics from private equity
firm HGGC for $800 million at an estimated 10.7x EBITDA
• Private equity firm The Gores Group’s acquisition of automotive injection molder U.S.
Farathane Corp.
• Myers Industries Inc. (NYSE:MYE) sale of its lawn and garden business to private equity
firm Wingate Partners for $115 million
Custom Molding
36%
Rigid
Packaging
7% Flexible
Packaging
9%
Bottles 7%
Flexible
Building
Products 5%
• Schweiter Technologies AG’s (SWX:SWTQ) acquisition of plastic sheet manufacturer
Polycasa NV for $137 million
The plastics and packaging industry has supported robust levels of M&A over the past
decade, with 300+ transactions in each of the last 8 years. With positive macroeconomic
trends driving a healthy global M&A market, current activity in the plastics and packaging
sector remains constrained in large part by
scarce, quality acquisition targets. The comQ1 YTD
bination of these factors has created ahones
Sector
2013
2014
‘14
seller’s market which owners considering a
Blow Molding
22
22
8
sale should carefully evaluate. Those planInjection Molding
ning longer-term exits should strategically
86
95
27
Film
plan for a hold period, and the execution of
60
63
13
value-creating business improvements, with
Resin/Color & Compounding
68
72
19
timing through the next business cycle.
Sheet & Thermoforming
38
23
7
Specialty
Total
54
328
66
341
18
92
Closures 2%
Consumer 1%
Industrial
15%
Resin
18%
% of ‘14 – ’15
%
Total Change Change
% of
Total
Q1 YTD
‘15
9%
29%
8
25
10%
31%
0
-2
0%
-7%
14%
21%
8%
13
15
5
16%
19%
6%
0
-4
-2
0%
-21%
-29%
19%
100%
14
80
18%
100%
-4
-12
-22%
-13%
Source: P&M Corporate Finance, Company Reports
pmcf.com
3
M&A Quarterly – Plastics & Packaging
Global Plastic Packaging M&A
Transactions by End Market
Transactions by Buyer Type
140
Number of Deals
120
Q1 YTD ‘14 Q1 YTD ‘15
114
118
118
99
100
80
47
48
53
66
65
43
60
40
71
56
20
0
2011
2012
Strategic
2013
28
11
22
8
14
2014
Financial
Q1 YTD ‘14
17
Q1 YTD ‘15
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
11
5
3
3
22
14
1
8
5
28
Trends in M&A:
•O
verall plastic packaging transactions increased by 6 deals through Q1 ‘15, or 27%, compared with M&A activity through the
previous year’s first quarter, driven by an increase in both financial and strategic acquisitions
•F
lexible packaging deals have accounted for the majority of the comparatively higher Q1 ’15 transaction volume, as the sector accounted for 43% of total transactions with its activity up by 50% from Q1 ‘14 levels
•F
ood & beverage remained the most active end market for plastic packaging M&A through Q1 ‘15, while the consumer segment, up
almost 3 fold from the prior period, has experienced the largest year-over-year increase
Q1 YTD ‘14
Q1 YTD ‘15
Buyer Type
PE to PE
9%
Public
Acquirer
37%
Private Equity
(PE)
27%
Packaging Transaction Detail
Private
AcquirerFlexible
27%
Q1 YTD ‘14
#
% Packaging
Private Equity
(PE)
39%
Public
Acquirer
47%
Rigid
Flexible
Bottling
Caps & Closures
Total
6
8
6
2
22
27%
37%
27%
9%
100%
Q1 YTD ‘15
#
% Packaging
5
12
6
5
28
18%
43%
21%
18%
100%
Private
Acquirer
14%
Featured Sector Transactions
January 2015 – MeadWestvaco Corp. (NYSE:MWV) and Rock-Tenn Inc. (NYSE:RKT) have agreed to merge, with the combined
entity set to generate approximately $16 billion in 2015 revenues. While both companies primarily operate in the paper packaging industry, MWV also has a significant plastic packaging business through its subsidiary MeadWestvaco Calmar Inc., which
engages in the production of injection molded pump and spray systems. MWV first entered into the dispensing systems market
in 2006 with the $710 million acquisition of Saint-Gobain Calmar. Subsequently, MWV also acquired Keltic Dispensing Systems
in 2007 and Polytop Corporation in 2012. Plastic packaging revenue today is believed to total over $500 million.
February 2015 – RPC Group Plc (LSE:RPC), a global leader in plastic packaging headquartered in the U.K., has acquired Netherlands-based bottle producer PET Power BV. PET Power employs over 200 and manufactures blow molded plastic packaging
products for the pharmaceutical, cosmetic, and food industries. The acquisition, which brings together two of the major players
in the European packaging market, is in line with RPC Group’s strategic initiative to invest and grow in the PET sector. The company also recently acquired Promens Group AS, a Kopavogur, Iceland-based plastics converter with 41 manufacturing plants in
Europe, North America, Asia, and Africa.
Sources: P&M Corporate Finance, Plastics News, Company Reports
PMCF
4
M&A Quarterly – Plastics & Packaging
Global Injection Molding M&A
Transactions by End Market
Transactions by Buyer Type
120
Number of Deals
100
80
Q1 YTD ‘14 Q1 YTD ‘15
110
106
86
39
27
52
29
60
40
95
67
58
2011
2012
57
68
2013
2014
27
9
18
20
0
Strategic
25
4
21
Q1 YTD ‘14
Q1 YTD ‘15
Financial
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
2
3
6
3
7
1
5
27
2
1
3
1
8
10
25
Trends in M&A:
• Transactions involving injection molders fell by 7% in Q1 ‘15, or two deals, versus Q1 ‘14, driven in part by declining activity in the
consumer and electronics sectors
• A declining number of injection molding transactions completed by financial buyers, down 56% through Q1 ‘15, also contributed
to reduced activity in the space
• From a cross-border perspective, the amount of foreign injection molders acquired in the first quarter of 2015 mirrored the Q1 ‘14
mark of 16 transactions, while the volume of U.S. injection molders acquired in the period fell by 18%
Q1 YTD ‘14
Sector Deal Statistics
Q1 YTD ‘15
Buyer Type
Private Equity
(PE)
33%
Public
Acquirer
37%
Private
Acquirer
30%
Q1 YTD ‘14 Q1 YTD ‘15
Private Equity
(PE)
16%
Private
Acquirer
36%
Public
Flexible
Acquirer
52%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
8
2
3
14
27
9
1
15
25
-
-
Featured Sector Transactions
•J
anuary 2015 – Los Angeles, CA-based private equity firm The Gores Group completed an acquisition of injection molder U.S.
Farathane Corp. U.S. Farathane, which is headquartered in Auburn Hills, MI, supplies injection molded components to an automotive customer base that includes Ford Motor Co. and General Motors. The Company operates 225 injection molding presses
via 10 manufacturing facilities throughout the United States and reported sales of $402 million in 2013. U.S. Farathane CEO
Andy Greenlee cited plans to seek acquisitive growth and global footprint expansion with the help of their new private equity
partners.
•J
anuary 2015 – Akron, Ohio-based diversified manufacturer Myers Industries Inc. (NYSE:MYE) sold its lawn and garden business to private equity firm Wingate Partners for $115 million. Myers’ lawn and garden segment primarily engages in the manufacturing of injection molded pots, planters, and related gardening equipment. Myers, which announced its plan to sell the
non-strategic lawn and garden business last June, cited plans to focus on growing core platforms such as material handling
and distribution as its motivation for the sale. Proceeds from the sale will also help Myers pay down debt, including financing
from the $157 million acquisition of Scepter Corp. in 2014.
Sources: P&M Corporate Finance, Plastics News, Company Reports
pmcf.com
5
M&A Quarterly – Plastics & Packaging
Global Film M&A
Transactions by End Market
Transactions by Buyer Type
80
Number of Deals
60
Q1 YTD ‘14 Q1 YTD ‘15
75
68
70
27
23
63
60
19
50
28
40
30
48
45
20
41
35
13
3
10
10
0
2011
2012
2013
Strategic
13
7
6
Q1 YTD ‘15
Q1 YTD ‘14
2014
Financial
6
2
3
2
13
5
6
1
1
13
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
Trends in M&A:
• Plastic film M&A activity remained flat during Q1 ’15, as compared to Q1 ‘14, recording 13 transactions in each period while the
distribution of deals showed slightly higher consumer and medical end market activity
• Financial buyers accounted for 54% of the film deals completed in Q1 ‘15, more than doubling their percentage of Q1 ‘14 transactions, while the level of total deals completed by strategic buyers fell from 77% to 46%
• Acquisitions involving U.S. film manufacturers declined by 50% in Q1 ’15, versus Q1 ’14, while a 43% increase in foreign sector
transactions kept overall film M&A flat through the quarter
Q1 YTD ‘14
Sector Deal Statistics
Q1 YTD ‘15
Buyer Type
PE to PE
8%
Private Equity
(PE)
15%
Public
Flexible
Acquirer
46%
Private
Acquirer
31%
Private Equity
(PE)
54%
Q1 YTD ‘14 Q1 YTD ‘15
Public
Acquirer
31%
Flexible
Private
Acquirer
15%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
4
2
7
13
3
1
9
13
-
-
Featured Sector Transactions
• February 2015 – Tekni-Plex Inc., owned by New York-based private investment firm American Securities, announced it has
agreed to acquire the pharmaceutical blister film and adhesive tape substrate film businesses of Italian film producer Gallazzi SpA. Tekni-Plex purchased the business units through its European subsidiary, Tekni-Plex Europe NV, with the intent to
strengthen its European product portfolio. Paul Young, CEO of Wayne, NJ-based Tekni-Plex, noted, “Gallazzi’s manufacturing
capabilities and product offerings are an excellent complement to our global Tekni-Films business.”
• March 2015 – Global packaging conglomerate Amcor Ltd (ASX:AMC), headquartered in Australia, announced it has purchased
the flexible packaging division of South African packaging company Nampak Holdings. The $22 million deal will make Amcor
the largest producer of flexible packaging in South Africa, and provide a platform for further expansion into the region. The
Nampak Flexibles division includes three manufacturing plants throughout South Africa with combined extrusion, lamination,
and conversion capabilities. In addition to the flexibles unit, Nampak has also completed dispositions of its corrugated, tissue,
and recycling businesses within the last year. Nampak stated plans to pursue growth in higher margin businesses as its basis
for the sale of these units.
Sources: P&M Corporate Finance, Plastics News, Company Reports
PMCF
6
M&A Quarterly – Plastics & Packaging
Global Resin and Color & Compounding M&A
Transactions by Buyer Type
80
Number of Deals
70
60
56
50
14
68
62
16
72
52
30
44
42
Color &
Compounding
37%
53
19
5
14
15
5
10
Q1 YTD ‘14
Q1 YTD ‘15
10
0
2011
2012
2013
Strategic
Sector Detail
Q1 YTD ‘15
19
18
40
20
Sector Detail
Q1 YTD ‘14
2014
Financial
Color &
Compounding
27%
Flexible
Flexible
Resin Supplier
73%
Resin Supplier
63%
Trends in M&A:
• Transaction volume among resin suppliers and color & compounders fell by 4 transactions, or 21%, year-over-year through the
first quarter of 2015 versus the first quarter of 2014
• The number of sector deals completed by financial buyers remained flat in Q1 ‘15, while the number of strategic buyer transactions fell 29% from Q1 ‘14 levels
• Cross-border M&A involving U.S. companies was down significantly in the resin and color & compounding space, with 2 deals
being completed in Q1 ‘15 versus a Q1 ‘14 that included 5 cross-border transactions
Q1 YTD ‘14
Sector Deal Statistics
Q1 YTD ‘15
Buyer Type
PE to PE
10%
Private Equity
(PE)
16%
Q1 YTD ‘14 Q1 YTD ‘15
PE to PE
13%
Public
Acquirer
Flexible
42%
Private
Acquirer
32%
Public
Acquirer
Flexible
40%
Private Equity
(PE)
20%
Private
Acquirer
27%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
4
4
1
10
19
4
2
9
15
Distressed
1
-
Featured Sector Transactions
March 2015 – A. Schulman Inc. (NasdaqGS:SHLM), an international supplier of plastic compounds and resins, announced it
has agreed to acquire Chicago, IL-based compounder and composites maker Citadel Plastics from private equity firm HGGC for
$800 million. Citadel reported EBITDA of $75 million in 2014, reflecting an estimated multiple of 10.7x on the transaction. The
company also had approximately $550 million of sales in 2014, supported by 1,200 employees and 21 manufacturing locations.
Citadel represents A. Schulman’s 10th acquisition since 2009, expanding the company’s North American manufacturing footprint and nearly doubling its sales in the region.
March 2015 – Switzerland-based specialty chemicals maker Sika AG (SWX:SIK) entered into an agreement with Axson SAS to
acquire its epoxy and polyurethane polymer formulator business Axson Technologies. Based in Saint-Ouen, France, Axson
Technologies serves a range of end markets including design, prototyping and tooling, structural adhesives, composite materials, and encapsulation products for the automotive, marine, renewable energy, sports & leisure, and construction markets. This
transaction comes only months after Axson acquired Trentesaux-Brochier’s polyurethane business, creating the company Axson
Merylith.
Sources: P&M Corporate Finance, Plastics News, Company Reports
pmcf.com
7
M&A Quarterly – Plastics & Packaging
Global Sheet and Thermoforming M&A
Transactions by End Market
Transactions by Buyer Type
40
Number of Deals
35
38
32
16
30
25
Q1 YTD ‘14 Q1 YTD ‘15
32
11
12
23
20
8
15
10
21
20
22
5
0
2011
2012
2013
Strategic
15
7
3
4
2014
Financial
Q1 YTD ‘14
5
2
3
Q1 YTD ‘15
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
1
3
1
2
7
1
1
1
2
5
Trends in M&A:
• Deals involving sheet and thermoforming companies fell by 2 deals in Q1 ‘15, a decline of 29% compared to Q1 ‘14 levels
• Transaction mix shifted slightly in Q1 ‘15, with a transaction occurring in the automotive space that saw no Q1 ‘14 activity, and
no deals being recorded in the consumer end market
• Publicly traded buyers accounted for all of the strategic sheet and thermoforming acquisitions that occurred in Q1 ‘15, while
financial transactions were split between PE to PE trading and new private equity deals
Q1 YTD ‘14
Q1 YTD ‘15
Sector Deal Statistics
Buyer Type
Q1 YTD ‘14 Q1 YTD ‘15
PE to PE
20%
Private Equity
(PE)
43%
Public
Acquirer
Flexible
43%
Private
Acquirer
14%
Private Equity
(PE)
20%
Flexible
Public
Acquirer
60%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
2
1
4
7
1
1
3
5
Distressed
-
-
Featured Sector Transactions
February 2015 – Geel, Belgium-based plastic sheet manufacturer Polycasa NV was acquired by Zurich, Switzerland-based Schweiter Technologies AG (SWX:SWTQ) for $137 million. Polycasa, formerly doing business as Quinn Plastics, employs more than
520 people across five manufacturing plants throughout Germany, Spain, Slovakia, the Czech Republic, and Belgium. Polycasa,
an operating subsidiary of British conglomerate Aventas Group, reported sales of $205.7 million in 2014. With this acquisition,
Schweiter stated plans to leverage Polycasa’s capabilities to strengthen the display business of its existing 3A Composites division.
March 2015 – Heavy gauge thermoformer McClarin Plastics, based in Hanover, PA, announced it will merge with Blackford Capital
portfolio company Amtech Corp. Based in Yakima, WA, Amtech manufactures composite-based products for military and commercial markets. Among its specialties are resin transfer molding and vacuum-assist RTM. The combined company will retain
the name McClarin Plastics and will have roughly 500 employees spread across manufacturing facilities in Washington, Pennsylvania, and Alabama. The merger will allow McClarin to better serve the entire U.S. market and is expected to boost annual
sales above $75 million. Blackford Capital, Amtech’s private equity sponsor, has helped the company grow sales from $9 to $38
million since 2008 and will continue its involvement in the new entity.
Sources: P&M Corporate Finance, Plastics News, Company Reports
PMCF
8
M&A Quarterly – Plastics & Packaging
Global Blow Molding M&A
Transactions by End Market
Transactions by Buyer Type
35
Number of Deals
25
15
20
18
15
8
10
5
0
Q1 YTD ‘14 Q1 YTD ‘15
30
30
15
10
2011
2012
Strategic
22
22
11
10
11
12
2013
8
4
2014
Financial
8
3
4
5
Q1 YTD ‘14
Q1 YTD ‘15
3
3
2
8
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
3
3
1
1
8
Trends in M&A:
• Global blow molding M&A deal volume remained flat in Q1 ‘15, with strategic buyers accounting for a slightly higher proportion of
deals versus Q1 ‘14 levels
• End market transaction mix fluctuated slightly year-over-year between Q1 ‘14 and Q1 ‘15, with medical and automotive end markets each accounting for one Q1 ‘15 transaction, and industrial blow molding deals falling by three
• Cross-border M&A activity in the blow molding space remained non-existent, while the number of deals completed in the U.S. and
abroad remained flat in Q1 ‘15 relative to the Q1 ‘14 results
Q1 YTD ‘14
Q1 YTD ‘15
Sector Deal Statistics
Buyer Type
PE to PE
25%
Public
Acquirer
25%
Flexible
Private Equity
(PE)
25%
Private
Acquirer
25%
Q1 YTD ‘14 Q1 YTD ‘15
PE to PE
12%
Public
Acquirer
Flexible
38%
Private Equity
(PE)
25%
Private
Acquirer
25%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
3
5
8
3
5
8
Distressed
2
1
Featured Sector Transactions
February 2015 – Chesterfield, MO-based rigid packaging manufacturer Pretium Packaging, a portfolio company of San Francisco, CA-based private equity firm Genstar Capital, announced it has acquired Intertech Corp. Privately-held Intertech, based
in Greensboro, NC, manufactures proprietary blow molded HDPE products and containers for a wide range of end markets,
including specialty chemical, personal health care, institutional, household, automotive, and agricultural. Acquiring Intertech
marks the second transaction in 3 months for Pretium, who acquired Hillsborough, NJ-based blow molder Tri-Delta Plastics in
December 2014. Pretium CEO George Abd, commenting on the transaction, noted that Pretium continues to seek strategic acquisitions in the space.
January 2015 – Leeds, England-based blow molder Esterform Packaging Ltd has acquired Constar UK, a former subsidiary of
Constar International Holdings. Constar UK, which is also based in Leeds, will provide an immediate boost to Esterform’s PET
preform manufacturing capabilities. The move is projected to double Esterform’s PET preform capacity, allowing it to produce 3
billion units annually. Mark Tyne, founder of Esterform, commented on the acquisition by noting, “the two companies manufacture very similar products with a good deal of duplicate tooling, so it makes perfect sense to merge Constar into the Esterform
group.”
Sources: P&M Corporate Finance, Plastics News, Company Reports
pmcf.com
9
M&A Quarterly – Plastics & Packaging
Additional Global Specialty Sector Activity
Transactions by Buyer Type
90
Number of Deals
60
50
40
60
10
0
54
16
24
53
32
2011
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
66
27
28
30
20
Q1 YTD ‘14 Q1 YTD ‘15
80
80
70
Transactions by End Market
50
30
2012
2013
Strategic
18
4
14
2014
Q1 YTD ‘14
Financial
14
6
8
Q1 YTD ‘15
1
6
4
5
1
1
18
2
8
1
2
1
14
Trends in M&A:
• Q1 ‘15 M&A activity involving specialty plastic process types, including rotational molding, foam, pipe & tube, profile extrusion,
and composites, experienced a slight decline in deal volume, down by four transactions in Q1 ‘15 relative to the first quarter of
2014
• The decline in specialty sector transaction volume was driven by lower levels of activity in the consumer and construction end
markets, combining for just 3 deals through Q1 ‘15, a 67% decrease from the combined 9 deals completed in Q1 ‘14
• Strategic buyers continue to represent the most active acquirers across specialty sectors, accounting for 57% of the Q1 ‘15 total,
even as the number of deals completed by strategic buyers fell from 14 to 8 compared with Q1 ’14 activity
FEATURED SECTOR TRANSACTIONS
Pipe & Tube
February 2015 – Advanced Drainage Systems (NYSE:WMS) significantly expanded its Canadian footprint via the acquisition
of Ontario-based HDPE pipe producer Ideal Pipe Inc. ADS, headquartered in Hilliard, OH, paid approximately $44 million to
acquire Ideal Pipe, reflecting a 7.3x transaction multiple on trailing twelve month EBITDA of $6.1 million. ADS, who previously operated only two plants in Canada, acquired three additional Canadian manufacturing facilities in the transaction. Joe
Chlapaty, ADS Chairman and CEO, noted, “Through the combination of our businesses, we will be able to pursue new and
exciting opportunities in the Canadian market and offer our customers an unmatched breadth of water management products
and solutions.”
Extrusion
March 2015 – VisiPak, a subsidiary of private investment firm Cameron Holding’s Sinclair & Rush Inc. platform, completed the
acquisition of Marion, IN-based plastic packaging manufacturer Tulox Plastics Corp. Tulox, who extrudes clear plastic tubes,
will relocate its manufacturing operations to VisiPak plants in St. Louis, MO and Carlstadt, NJ. VisiPak designs and produces
clear plastic packaging through extrusion, thermoforming, injection molding, and other fabricating and decorating technologies. The company’s products include clamshell packaging, clear plastic tubes, transparent boxes, blister packs, and plastic
trays.
Engineered Foam
March 2015 – Armacell, a global leader in flexible insulation and engineered foams based in Germany, announced it has agreed
to acquire Industrial Thermo Polymers Limited through its subsidiary Armacell International. ITP is a leading Canadian-based
manufacturer of extruded polyethylene insulation products. The transaction represents the second add-on acquisition completed by Armacell since being acquired by London private equity firm Charterhouse Capital Partners in 2013.
PMCF
Source: P&M Corporate Finance, Plastics News, Company Reports
10
M&A Quarterly – Plastics & Packaging
PMCF Plastics & Packaging Index
PMCF Plastics & Packaging Index
S&P 500 Index
170%
160%
150%
140%
130%
120%
110%
100%
Note: Chart highlights relative stock price return
90%
Mar-13
Jun - 13
Sep - 13
Dec - 13
Mar-14
Jun-14
Sep- 14
Dec - 14
Mar- 15
PMCF Plastics & Packaging Index Valuation
Revenue Multiple
Average
Median
EBITDA Multiple
Average
Median
Q1 ‘13
Q2 ‘13
Q3 ‘13
Q4 ‘13
Q1 ‘14
Q2 ‘14
Q3 ‘14
Q4 ‘14
Q1 ‘15
1.0x
1.0x
1.1x
1.1x
1.2x
1.1x
1.2x
1.1x
1.2x
1.1x
1.2x
1.2x
1.2x
1.2x
1.2x
1.1x
1.4x
1.3x
8.4x
8.2x
9.2x
8.7x
9.4x
8.8x
9.5x
8.8x
9.5x
8.8x
9.4x
9.3x
9.4x
9.3x
9.3x
9.0x
10.8x
10.5x
Source: Capital IQ
Note: Multiples based on most recent data available as of printing
• The PMCF Plastics & Packaging Index slightly outperformed the S&P 500 Index from March ‘13 through ‘15, with a relative stock
price return approximately 5% higher than its benchmark
• Stock market valuations increased significantly for publicly traded plastics businesses in Q1 ’15, with average EV/EBITDA multiples up over a full turn from the previous quarter
U.S. Middle Market Transaction Summary (All Industries)
Private Equity Investments
U.S. M&A Activity — Deals < $500M
Deal Volume
18,133
16,542
16,126
14,315
11,531
10,342
4,336
2008
2009
2010
2011
2012
2013
4,579
2014 Q1 ‘14 Q1 ‘15
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
Capital Invested
3,500
*Includes all disclosed transaction with at least one U.S. party
$1,400
2,997
3,000
2,500
2,947
2,955
$1,200
2,529
2,382
$1,000
2,350
2,000
$800
1,605
1,500
$600
1,000
851
634
500
0
$400
$200
2008
2009
2010
2011
2012
2013
2014 Q1 ‘14 Q1 ‘15
Deal Value ($ in Billions)
18,784
Number of Deals
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Disclosed Deal Value
Deal Value ($ in Billions)
Number of Deals
No. of Deals
Dollars in Billions
$0
Source: Capital IQ, Pitchbook, and PMCF Estimates
• Average deal size in the U.S. middle market decreased in Q1 ’15, relative to Q1 ’14, with total deal value falling despite an over 5%
increase in transaction volume
• U.S. private equity activity declined in terms of both deal volume and capital invested, even with record levels of uninvested capital,
as the supply of quality acquisition targets has dwindled after years of sustained activity
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Notable Awards for PMCF:
2013 Industrial
Manufacturing/Distribu tion
Deal of the Year
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recommend securities of individual companies, nor does it contain sufficient information upon which to make an investment decision.
P&M Corporate Finance, LLC will seek to provide investment banking and/or other services to one or more of the companies mentioned in this market overview.
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Information, opinions, and estimates reflect P&M Corporate Finance, LLC’s judgment as of the date of publication and are subject to change without notice. P&M Corporate Finance, LLC undertakes no obligation to notify
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The charts and graphs used in this market overview have been compiled by P&M Corporate Finance, LLC solely for illustrative purposes. All charts are as of the date of issuance of this market overview, unless otherwise
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indicator of future results.
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