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Top News in PLASTICS AND PACKAGING
M&A Quarterly
For additional information or inquiries, please contact one of our team members:
www.pmcf.com
PLASTICS & PACKAGING FIRST QUARTER 2015
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]
About PMCF
P&M Corporate Finance (“PMCF”) is an investment bank-ing firm, focused exclusively on middle market transac-tions, with professionals in Chicago, Detroit, and across the globe through Corporate Finance International asso-ciates. Our dedicated Plastics and Packaging Group has deep industry knowledge and covers a wide range of pro-cesses including thermoforming, sheet and film extru-sion, blow molding, injection molding, and resin and color compounding. Offering a breadth of advisory services, the Plastics and Packaging Group has helped clients world-wide meet their sale, acquisition, financing, and strategic growth objectives.
Investment Banking Services:
• Mergers & Acquisitions
• Sales & Divestitures
• Capital Raising
• Sale Planning
has acquired
PMCF Transaction Announcements
Packaging: Food and HealthcareBlow and Injection Molding
Company Sale toFinancial Buyer
Packaging: Health and BeautyInjection Molding and Metalizing
Company Sale toInternational Buyer
has been acquired by
Packaging: FoodInjection Molding and Decorating
Strategic Acquisition Advisory
JOHN HART Managing Director [email protected]
RYAN SHUCHMAN Vice President 248.603.5372 [email protected]
pmcf.com
M&A Quarterly – Plastics & Packaging
2
Following the flurry of plastics and packaging M&A in Q4 2014, to-taling 101 transactions, Q1 ‘15 transaction volume not surprisingly reflected a more normalized trend. When reviewing Q1 ’15 deal vol-ume, 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 re-mained 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 environ-ment. 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 pack-aging sector will likely remain a focus for strategic and financial buyers given these robust market conditions.
Key Q1 2015 plastics and packaging M&A trends included the following:
• Despite experiencing a larger year-over-year decline in deal activity, strategic buyers re-mained the most acquisitive buyer segment, accounting for approximately 66% of first quarter transactions, while private equity firms completed 14 and 13 add-on and plat-form acquisitions, respectively
• 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
• 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
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)
• 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
• 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 com-bination of these factors has created ahones seller’s market which owners considering a sale should carefully evaluate. Those plan-ning longer-term exits should strategically plan for a hold period, and the execution of value-creating business improvements, with timing through the next business cycle.
Strategic Financial Add-On Financial Platform
220
55
72
347
235
68
79
382
213
56
59
328
64
1414
92
266
60
67
393
0
50
100
150
200
250
300
400
350
20142010 Q1 YTD ‘142011 2012 2013
Num
ber
of D
eals
233
49
59
341
53
141380
Q1 YTD ‘15
First Quarter 2015 Market Summary & Outlook
Q1 YTD 2015
Q1 YTD 2014
Flexible
Rigid Packaging
7%
Industrial15%
Closures 2%Bottles 7%
Resin18%
Custom Molding36%
Building Products 5%
FlexiblePackaging
9%
Consumer 1%
Sector‘14 – ’15
Change
Injection Molding
Blow Molding
Film
Resin/Color & Compounding
Sheet & Thermoforming
Specialty
Total
201322
86
60
68
38
54
328
22
95
63
72
23
66
341
8
27
13
19
7
18
92
9%
29%
14%
21%
8%
19%
100%
8
25
13
15
5
14
80
10%
31%
16%
19%
6%
18%
100%
% of Total
% of Total2014
% Change
Q1 YTD‘15
Q1 YTD‘14
0
-2
0
-4
-2
-4
-12
0%
-7%
0%
-21%
-29%
-22%
-13%
Source: P&M Corporate Finance, Company Reports
Flexible
Rigid Packaging
6%
Industrial19%
Consumer1%
Bottles7%
Resin14%
BuildingProducts
3%
FlexiblePackaging
15%Custom Molding
29%
Closures6%
Transactions by Product Segment
M&A Quarterly – Plastics & Packaging
PMCF
3
Global Plastic Packaging M&A
Trends in M&A:
• Overall 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
• Flexible packaging deals have accounted for the majority of the comparatively higher Q1 ’15 transaction volume, as the sector ac-counted for 43% of total transactions with its activity up by 50% from Q1 ‘14 levels
• Food & 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
Transactions by Buyer Type Transactions by End Market
0
20
40
60
80
100
120
140
65
53
118
Q1 YTD ‘14
66
48
114
2014
71
47
118
Q1 YTD ‘15
148
22
2011
56
43
2012
17
1128
2013Strategic Financial
Num
ber
of D
eals 99
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
11
5
3
-
3
-
-
-
22
14
1
8
-
5
-
-
-
28
Q1 YTD ‘15Q1 YTD ‘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 packag-ing 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 Neth-erlands-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 com-pany also recently acquired Promens Group AS, a Kopavogur, Iceland-based plastics converter with 41 manufacturing plants in Europe, North America, Asia, and Africa.
Flexible
Public Acquirer
37%
Private Acquirer
27%
PE to PE9%
Private Equity(PE)27%
Public Acquirer
47%
Private Acquirer
14%
Private Equity(PE)39%
RigidFlexibleBottlingCaps & Closures
Total
6862
22
27%37%27%9%100%
# % Packaging # % Packaging5
1265
28
18%43%21%18%100%
Q1 YTD ‘15Q1 YTD ‘14
Q1 YTD ‘14 Q1 YTD ‘15
Buyer Type
Packaging Transaction Detail
Sources: P&M Corporate Finance, Plastics News, Company Reports
pmcf.com
M&A Quarterly – Plastics & Packaging
4
Global Injection Molding M&A
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%
Featured Sector Transactions • January 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 au-tomotive 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.
• January 2015 – Akron, Ohio-based diversified manufacturer Myers Industries Inc. (NYSE:MYE) sold its lawn and garden busi-ness to private equity firm Wingate Partners for $115 million. Myers’ lawn and garden segment primarily engages in the manu-facturing 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.
Q1 YTD ‘14 Q1 YTD ‘15
Buyer Type
Public Acquirer
37%
Private Acquirer
30%
Private Equity(PE)33% Flexible Public
Acquirer52%Private
Acquirer36%
Private Equity(PE)16%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
9
1
-
15
25
-
8
2
3
14
27
-
Q1 YTD ‘15Q1 YTD ‘14
Sector Deal Statistics
Sources: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type Transactions by End Market
0
20
40
60
80
100
120
58
52
110
Q1 YTD ‘14
67
39
106
2014
57
29
86
Q1 YTD ‘15
189
27
2011
68
27
95
2012
214
25
2013
Strategic Financial
Num
ber
of D
eals
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
Q1 YTD ‘15Q1 YTD ‘14
M&A Quarterly – Plastics & Packaging
PMCF
5
Global Film M&A
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 transac-
tions, 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 Q1 YTD ‘15Buyer Type
Flexible Public
Acquirer31%
Private
Acquirer46%
Private Equity(PE)15%
PE to PE8%
Flexible
Public
Acquirer15%
Private
Acquirer31%
Private Equity(PE)54%
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
4
-
2
7
13
-
Q1 YTD ‘14
3
1
-
9
13
-
Q1 YTD ‘15
Sector Deal Statistics
Sources: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type Transactions by End Market
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
6
2
3
-
2
-
-
-
13
Q1 YTD ‘15
5
6
1
-
1
-
-
-
13
Q1 YTD ‘14
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 Galla-zzi 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.
Strategic Financial
45
23
68
Q1 YTD ‘14
48
27
75
2014
41
19
60
Q1 YTD ‘15
103
13
2011
35
28
63
201267
13
2013
Num
ber
of D
eals
0
10
20
30
40
60
80
50
70
pmcf.com
M&A Quarterly – Plastics & Packaging
6
Global Resin and Color & Compounding M&A
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 transac-
tions 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
Sector Detail Q1 YTD ‘14
Flexible
Color &Compounding
37%
Resin Supplier63%
Flexible
Color &Compounding
27%
Resin Supplier73%
Sector Detail Q1 YTD ‘15
Q1 YTD ‘14 Q1 YTD ‘15Buyer Type
Flexible
Private Equity(PE)16%
Public Acquirer
42%
Private Acquirer
32%
PE to PE10%
Flexible Private Equity
(PE)20%
Public Acquirer
40%
Private Acquirer
27%
PE to PE13% U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
4
-
2
9
15
-
Q1 YTD ‘15
4
4
1
10
19
1
Q1 YTD ‘14
Sector Deal Statistics
Sources: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type
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 foot-print 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 materi-als, 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.
0
10
20
30
40
60
80
50
70
42
14
56
44
18
62
52
16
68
14
519
53
19
72
10
15
Strategic Financial2014 Q1 YTD ‘14 Q1 YTD ‘152011 2012 2013
5
Num
ber
of D
eals
M&A Quarterly – Plastics & Packaging
PMCF
7
Global Sheet and Thermoforming M&A
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
Sources: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type Transactions by End Market
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
1
3
1
-
-
-
2
-
7
Q1 YTD ‘14
1
1
-
-
-
1
2
-
5
Q1 YTD ‘15
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
1
1
-
3
5
-
Q1 YTD ‘15
2
-
1
4
7
-
Q1 YTD ‘14
Sector Deal StatisticsQ1 YTD ‘14 Q1 YTD ‘15Buyer Type
Flexible Private Equity
(PE)43%
Public Acquirer
43%
Private Acquirer
14%
Flexible
Private Equity(PE)20%
Public Acquirer
60%
PE to PE20%
Featured Sector Transactions February 2015 – Geel, Belgium-based plastic sheet manufacturer Polycasa NV was acquired by Zurich, Switzerland-based Sch-weiter 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 com-mercial 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, Penn-sylvania, 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.
0
5
10
15
20
25
30
40
35
21
11
32
20
12
32
22
16
38
43715
8
23
325
Num
ber
of D
eals
Strategic Financial2014 Q1 YTD ‘14 Q1 YTD ‘152011 2012 2013
pmcf.com
M&A Quarterly – Plastics & Packaging
8
Global Blow Molding M&A
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 mar-kets 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
Sources: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type Transactions by End Market
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
3
-
3
-
1
1
-
-
8
Q1 YTD ‘15
3
3
2
-
-
-
-
-
8
Q1 YTD ‘14
U.S.-to-U.S.
U.S.-to-Foreign
Foreign-to-U.S.
Foreign
Total
Distressed
3
-
-
5
8
1
Q1 YTD ‘15
3
-
-
5
8
2
Q1 YTD ‘14
Sector Deal StatisticsQ1 YTD ‘14 Q1 YTD ‘15Buyer Type
Flexible
Private Equity(PE)25%
PE to PE25%
Private Acquirer
25%
Public Acquirer
25%
Flexible Private Equity(PE)25%
PE to PE12%
Public Acquirer
38%
Private Acquirer
25%
Featured Sector Transactions February 2015 – Chesterfield, MO-based rigid packaging manufacturer Pretium Packaging, a portfolio company of San Fran-cisco, 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 ac-quisitions 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 manufac-ture very similar products with a good deal of duplicate tooling, so it makes perfect sense to merge Constar into the Esterform group.”
0
5
10
15
20
25
30
35
11
11
22
4
4 8
5
38
10
8
18
15
15
30
Num
ber
of D
eals
Strategic Financial2014 Q1 YTD ‘14 Q1 YTD ‘152011 2012 2013
12
10
22
M&A Quarterly – Plastics & Packaging
PMCF
9
Additional Global Specialty Sector Activity
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 TRANSACTIONSPipe & TubeFebruary 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 previ-ously 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.”
ExtrusionMarch 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 technolo-gies. The company’s products include clamshell packaging, clear plastic tubes, transparent boxes, blister packs, and plastic trays.
Engineered FoamMarch 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 com-pleted by Armacell since being acquired by London private equity firm Charterhouse Capital Partners in 2013.
Source: P&M Corporate Finance, Plastics News, Company Reports
Transactions by Buyer Type Transactions by End Market
Food and Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
1
6
4
5
1
-
1
-
18
Q1 YTD ‘14
2
8
1
2
-
-
1
-
14
Q1 YTD ‘15
0
10
20
30
40
50
60
70
90
80
28
32
60 27
53
80
30
24
54
50
16
66
144
18
86
14
Num
ber
of D
eals
Q1 YTD ‘142014 Q1 YTD ‘152011 2012 2013Strategic Financial
pmcf.com
M&A Quarterly – Plastics & Packaging
10
PMCF Plastics & Packaging Index S&P 500 Index
Note: Chart highlights relative stock price return
Mar- 15Sep - 13 Dec - 13 Mar-14 Jun-14 Sep- 14 Dec - 14Jun - 13Mar-1390%
110%
130%
150%
170%
100%
120%
140%
160%
PMCF Plastics & Packaging Index
PMCF Plastics & Packaging Index Valuation
• 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 mul-tiples up over a full turn from the previous quarter
Revenue MultipleAverageMedian
EBITDA MultipleAverageMedian
1.0x1.0x
8.4x8.2x
Q1 ‘15
1.2x1.1x
9.4x8.8x
1.1x1.1x
9.2x8.7x
Q1 ‘13
1.2x1.1x
9.5x8.8x
Q2 ‘13
1.2x1.1x
9.5x8.8x
Q3 ‘13 Q4 ‘13
1.2x1.2x
9.4x9.3x
1.2x1.2x
9.4x9.3x
Q1 ‘14
1.2x1.1x
9.3x9.0x
Q2 ‘14
1.4x1.3x
10.8x10.5x
Q3 ‘14 Q4 ‘14
Private Equity InvestmentsDollars in Billions
No. of Deals Disclosed Deal Value
Num
ber
of D
eals
0
Dea
l Val
ue ($
in B
illio
ns)
$0$50$100$150$200$250$300$350$400$450$500
2,000 4,000 6,000 8,000
10,000 12,000 14,000 16,000 18,00020,000
2008
18,784
2009
11,531
2010
10,342
2011
14,315
2012
16,126
2013
18,133
2014
16,542
Q1 ‘14 Q1 ‘15
4,336 4,579
Deal Volume Capital Invested
Num
ber
of D
eals
$00
Dea
l Val
ue ($
in B
illio
ns)
2008 2009
2,955
2010
2,382
2012
1,605
2014
2,350
Q1 ‘14
2,529
Q1 ‘15
2,997 2,947
$200
$400
$600
$800
$1,000
$1,200
$1,400
500
1,000
1,500
2,000
2,500
3,000
3,500
851634
2011 2013
• 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
U.S. M&A Activity — Deals < $500M
U.S. Middle Market Transaction Summary (All Industries)
Source: Capital IQ, Pitchbook, and PMCF Estimates
Note: Multiples based on most recent data available as of printingSource: Capital IQ
*Includes all disclosed transaction with at least one U.S. party
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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.
P&M Corporate Finance, LLC, and/or the analysts who prepared this market update, may own securities of one or more of the companies mentioned in this market overview.
The information provided in this market overview was obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not to be construed as legal, accounting, financial, or investment advice. 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 any recipient of this market overview of any such change.
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 noted.
The PMCF Plastics Index may not be inclusive of all companies in the plastics industry and is not a composite index of the plastic industry sector returns. Index and sector returns are past performance which is not an indicator of future results.
This market overview is not directed to, or intended for distribution to, any person in any jurisdiction where such distribution would be contrary to law or regulation, or which would subject P&M Corporate Finance, LLC to licensing or registration requirements in such jurisdiction.
Notable Awards for PMCF:
2013 IndustrialManufacturing/Distribu tion
Deal of the Year