plastics & packaging - pmcf.compackaging subsidiaries include yorker packaging, a manufacturer...
TRANSCRIPT
2015
WWW.PMCF.COM
M&A QUARTERLYPlastics & Packaging2 0 1 5 Y E A R I N R E V I E W
2 | M & A Q UA R T E R LY — P L A ST I C & PAC K AG I N G
JOHN HARTManaging Director248.223.3468 | [email protected]
• 15+ Years of M&A Advisory Experience• Exclusively Focused on Executing Plastics and
Packaging Transactions• Has Led Successful Completion of More Than
20 Transactions in Plastics and Packaging Over the Last 5 Years
• Authored Over 25 Industry M&A Reports and a Frequent Speaker at Trade Conferences
• Network Includes Executive Contacts with Strategic and Private Equity Groups in Packaging
RYAN SHUCHMANVice President248.603.5372 | [email protected]
• 10+ Years of M&A Advisory & Finance Experience• Exclusively Focused on Executing Plastics and
Packaging Transactions• Successfully Completed Transactions in Rigid &
Flexible Plastic Packaging, Corrugated Packaging, Raw Materials, and Engineered Components
• Conducts In-Depth Research on Packaging Market M&A and Industry Growth Trends
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.
Packaging: Medical Thermoforming
Company Sale to Strategic Buyer
Chicago 225 W. Washington Street, Suite 2700 Chicago, IL 60606 312.602.3600 Detroit Two Towne Square, Suite 425 Southfield, MI 48076 248.603.5300
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. Investment Banking Services:
• Mergers & Acquisitions
• Sales & Divestitures
• Capital Raising
• Sale Planning
Packaging: Specialty Food Blow Molding & Decoration
Company Sale to Strategic Buyer
PMCF Transaction Announcements
NOTE: PREGRAPHICS VERSION
Packaging: Beverage Injection Molded Preforms
Strategic Acquisition Advisory
Packaging: Medical Thermoforming
Company Sale to Strategic Buyer
Chicago 225 W. Washington Street, Suite 2700 Chicago, IL 60606 312.602.3600 Detroit Two Towne Square, Suite 425 Southfield, MI 48076 248.603.5300
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. Investment Banking Services:
• Mergers & Acquisitions
• Sales & Divestitures
• Capital Raising
• Sale Planning
Packaging: Specialty Food Blow Molding & Decoration
Company Sale to Strategic Buyer
PMCF Transaction Announcements
NOTE: PREGRAPHICS VERSION
Packaging: Beverage Injection Molded Preforms
Strategic Acquisition Advisory
Packaging: Medical Thermoforming
Company Sale to Strategic Buyer
Chicago 225 W. Washington Street, Suite 2700 Chicago, IL 60606 312.602.3600 Detroit Two Towne Square, Suite 425 Southfield, MI 48076 248.603.5300
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. Investment Banking Services:
• Mergers & Acquisitions
• Sales & Divestitures
• Capital Raising
• Sale Planning
Packaging: Specialty Food Blow Molding & Decoration
Company Sale to Strategic Buyer
PMCF Transaction Announcements
NOTE: PREGRAPHICS VERSION
Packaging: Beverage Injection Molded Preforms
Strategic Acquisition Advisory
PMCF Transaction Announcements
INVESTMENT BANKING SERVICES:
• Mergers & Acquisitions
• Sales & Divestitures
• Strategic Assessments
• Capital Raising
• Sale Planning
PACKAGING: SPECIALT Y FOODBlow Molding & DecorationCompany Sale to Strategic Buyer
PACKAGING: BEVERAGEInjection Molded PreformsStrategic Acquisition Advisory
PACKAGING: MEDICALThemoformingCompany Sale to Strategic Buyer
has been acquired by
a portfolio company ofhas acquired
a subsidiary of
has been acquired by
LOCATIONSChicago
225 W. Washington Street
Suite 2700
Chicago, IL 60606
312.602.3600
Detroit
Two Towne Square
Suite 425
Southfield, MI 48076
248.603.5300
W W W. P M C F. C O M | 3
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2009 2010 2011 2012 2013 2014 2015
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237
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F I N A N C I A L A D D - O NS T R AT E G I C F I N A N C I A L P L AT F O R M
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F L E X I B L EPA C K A G I N G
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C U S T O MM O L D I N G
15%R E S I N
B O T T L E S
C L O S U R E S
C O N S U M E R
B U I L D I N G P R O D U C T S
15%6%
5%4%
4%I N D U S T R I A L
9%
R I G I D PA C K A G I N G
14%
F L E X I B L EPA C K A G I N G
28%
C U S T O MM O L D I N G
18%R E S I N
B O T T L E S
C L O S U R E S
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14%
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I N D U S T R I A L 9%B U I L D I N G
P R O D U C T S
2 0 1 5 2 0 1 4
16%
R I G I D PA C K A G I N G
15%
F L E X I B L EPA C K A G I N G
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C U S T O MM O L D I N G
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1 % C O N S U M E R
14%
2%
5%
I N D U S T R I A L 9%B U I L D I N G
P R O D U C T S
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY PRODUCT SEGMENT
2015 Market Summary & Outlook
In 2015 plastics and packaging market factors of note included steady de-mand, favorable input costs, high levels of available debt (at low interest rates), strong corporate balance sheets, and an oversupply of aggressive strategic and private equity acquirers.
These drivers supported very healthy plastics and packaging transaction volume in 2015, down only slightly versus 2014, as the number of deals completed in 2015 trended closer to 2013 levels. Plastics and packaging transactions totaled 328 in 2015 versus a total of 346 in 2014.
Key 2015 plastics and packaging M&A trends included the following:
• U.S. buyers completed roughly 20 fewer plastics and packaging transactions in 2015 compared with 2014 levels, offset by increasing deal volume among foreign buyers in the U.S. and abroad
• The proportion of total plastics and packaging transactions completed by financial buyers was nearly 40% in 2015, up from 32% in 2014 as private equity remains very aggressive
• Transaction mix fluctuated in 2015 as the rigid and flexible packaging segments combined for 31% of total transactions, an 8% increase. Conversely, custom molding and building products combined for just 26% of 2015 deals, an 11% decline
• Publicly traded plastics and packaging businesses remained at elevated valuations, but EV/EBITDA values peaked mid year and declined in the second half
Key transactions for the quarter included the following:
• $130 billion dollar merger between DuPont (NYSE:DD) and The Dow Chemical Company (NYSE:DOW)
• Newell Rubbermaid Inc.’s (NYSE:NWL) acquisition of Jarden Corp (NYSE:JAH) for $15 billion
• Solvay SA’s (ENXTBR:SOLB) acquisition of competitor Cytec Industries (NYSE:CYT) for approximately $6.4 billion
• KIRKBI A/S and The Blackstone Group L.P.’s (NYSE:BX) acquisition of Armacell GmbH for $1 billion
• RPC Group’s (LSE:RPC) acquisition of European injection molded packaging business Global Closure Systems for $715 million
2015’s robust activity levels reflect a strong M&A environment for plastics and packaging and what is generally agreed to be a “seller’s market.” We’ve received numerous inquiries as to whether the M&A market has peaked and when we believe it will start to decline. Our current view is plastics and pack-aging M&A will remain active in 2016, despite potential economic and po-litical headwinds, given the sector’s historical resilience and the continued fragmentation among the supply base. However, our outlook for 2017 is less certain and we currently expect some contraction in M&A given the length of the current, robust cycle.
SECTOR 2012 2013 2014% of Total 2015 % of Total
'14 - '15 Change
% Change
Blow Molding 30 22 23 7% 22 7% -1 -4%
Injection Molding
110 86 95 27% 102 31% 7 7%
Film 68 60 65 19% 59 18% -6 -9%
Resin / Color & Compounding
62 68 72 21% 54 16% -18 -25%
Sheet & Thermoforming
32 38 23 6% 30 9% 7 30%
Specialty 80 54 68 20% 61 19% -7 -10%
TOTAL 382 328 346 100% 328 100% -18 -5%
Source: P&M Corporate Finance, Company Reports, Bloomberg, Capital IQ
4 | M & A Q UA R T E R LY — P L A ST I C & PAC K AG I N G
FEATURED SECTOR TRANSACTIONS
December 2015 – Newell Rubbermaid (NYSE: NWL) has acquired
Jarden Corporation (NYSE: JAH) for approximately $15 billion. The
combined entity is expected to generate $16 billion in annual sales
and $3 billion in EBITDA. Both companies have a significant pres-
ence in plastic packaging and are focused on branded consumer
products. Cost savings resulting from the deal are expected to reach
approximately $500 million over the next four years. Notable Jarden
packaging subsidiaries include Yorker Packaging, a manufacturer of
injection molded specialty caps and closures, and WNA Inc., a lead-
ing producer of thermoformed foodservice packaging.
December 2015 – Plastic packaging consolidator RPC Group plc
(LSE:RPC) has acquired Global Closure Systems (GCS) from French
investment firm PAI Partners. GCS was formed in 2005 when PAI Part-
ners acquired the beverage and specialty closures business of Crown
Holdings Inc. The deal, which will combine two European leaders in
rigid packaging, is valued at approximately $715 million. The GCS ac-
quisition will enhance RPC’s existing closures business and bolster
the company’s global rigid packaging platform. RPC is expecting an-
nual synergies from the deal to exceed $15 million, mostly resulting
from improved resin purchasing capabilities.
2 0 1 4 2 0 1 5
15%
27%
27%
31%
6%
42%
32%
20%
P U B L I C A C Q U I R E R
P U B L I C A C Q U I R E R
P R I VAT EA C Q U I R E R P R I VAT E
A C Q U I R E R
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E Q U I T Y ( P E )
P E t o P E
P E t o P E
Global Plastic Packaging M&A
2014 2015
Food & Beverage 58 71
Industrial 22 14
Consumer 16 30
Construction - -
Medical 8 13
Automotive - -
Transportation - -
Electronics - -
TOTAL 104 128
2014 2015
# %PACKAGING # %PACKAGING
Rigid 33 32% 54 42%
Flexible 49 47% 48 38%
Bottling 16 15% 12 9%
Caps & Closures 6 6% 14 11%
TOTAL 104 100% 128 100%
TRENDS IN M&A
• Global plastic packaging transaction volume experienced strong growth in
2015, up by 23% versus 2014 levels, driven by active strategic buyers
• Rigid packaging experienced the highest percentage growth among
packaging types in 2015, growing by 21 deals year over year, and
representing 42% of total deals completed in plastic packaging
• Packaging manufacturers focused on Food & Beverage, Consumer,
and Medical end markets remained attractive acquisition targets for
both strategic and financial buyers in 2015, with all three end markets
exceeding 2014 transaction totals
Sources: P&M Corporate Finance, Plastics News, Company Reports, Bloomberg
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
PACKAGING TRANSACTION DETAIL
BUYER T YPE
0
30
60
90
120
150
2010 2011 2012 2013 2014 2015
80 66 65
53
71
47
60
44
79
495148
131
114 118 118104
128
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W W W. P M C F. C O M | 5
FEATURED SECTOR TRANSACTIONS
October 2015 – Amcor Limited (ASX:AMC), a global leader in rigid
plastic packaging, has acquired Encon, Inc. for approximately $55
million. Encon, also known as Eco-Groupe Inc., produces injection
molded PET preforms primarily for the beverage industry. The Day-
ton, Ohio-based company has annual sales of approximately $110
million. The acquisition will add significant production capacity and
technology assets to Amcor’s existing preform manufacturing opera-
tion. Encon’s attractive portfolio of technology includes the innovative
Viper modular molding system and Eco-Pod mobile manufacturing
technology. PMCF served as the exclusive financial advisor to Amcor.
December 2015 – PSB Industries (ENXTPA:PSB), a leading manufac-
turer of cosmetic packaging based in France, announced that it has
agreed to acquire Topline Products Company. Topline Products, which
is headquartered in Wayne, New Jersey, manufactures innovative
beauty packaging and supplies for clients worldwide. The Topline deal
is PSB’s second recent acquisition of a US-based cosmetic packaging
manufacturer, as the company continues to bolster its North Amer-
ican footprint via acquisitive growth. PSB acquired New York-based
C+N Packaging in July 2014. Following the Topline acquisition, PSB
will have five manufacturing facilities in North America, with three
located in the United States and two in Mexico.
2 0 1 4 2 0 1 5
7%
36%
21%
36%
8%
37%
32%
23%
P U B L I C A C Q U I R E R P U B L I C
A C Q U I R E R
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P R I VAT EE Q U I T Y ( P E )
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P E t o P E P E t o
P E
Global Injection Molding M&A
2014 2015
Food & Beverage 8 14
Industrial 19 21
Consumer 13 19
Construction - 2
Medical 13 17
Automotive 33 24
Transportation 1 1
Electronics 8 4
Total 95 102
2014 2015
U.S.-to-U.S. 26 29
U.S.-to-Foreign 5 6
Foreign-to-U.S. 11 6
Foreign 53 61
Total 95 102
Distressed 2 5
TRENDS IN M&A
• Injection molding transaction volume reached 102 deals in 2015, up 7%
versus 2014, as the number of transactions involving injection molders
surpassed the 100 annual deals watermark for the fourth time since 2010
• Financial buyers significantly grew their investments in injection molding
by 52% year over year, completing 14 more Injection Molding transactions
in 2015 versus 2014 levels
• Transaction volumes by end market were up across 5 of 8 segments in
2015, while the number of deals involving automotive injection molders
declined by 9 deals year over year
Sources: P&M Corporate Finance, Plastics News, Company Reports
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
BUYER T YPE
SECTOR DEAL STATISTICS
0
20
40
60
80
100
120
2010 2011 2012 2013 2014 2015
70 67 58
52
57
29
68
27
61
4136 39
106 106 110
8695
102
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F I N A N C I A LS T R AT E G I C
6 | M & A Q UA R T E R LY — P L A ST I C & PAC K AG I N G
2 0 1 4 2 0 1 5
15%
28%
29%
28%
6%
37%
32%
25%
P U B L I C A C Q U I R E R
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E Q U I T Y ( P E )
P E t o P E
P E t o P E
Global Film M&A
2014 2015
Food & Beverage 30 31
Industrial 18 14
Consumer 8 8
Construction 3 -
Medical 4 5
Automotive 2 -
Transportation - -
Electronics - 1
Total 65 59
Sources: P&M Corporate Finance, Plastics News, Company Reports
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
BUYER T YPE
SECTOR DEAL STATISTICS
FEATURED SECTOR TRANSACTIONS
December 2015 – Pamplona Capital Management portfolio compa-
ny and blown film platform Charter NEX Films Inc. has acquired Op-
timum Plastics. Charter NEX acquired Bloomer Holdings Inc., doing
business as Optimum Plastics, from Detroit-based investment firm
Huron Capital Partners. Huron Capital formed the current Optimum
Plastics platform via its acquisitions of engineered films producer
Bloomer Plastics in 2012 and blown film manufacturer Optimum
Plastics in 2014. Optimum Plastics currently has two facilities lo-
cated in Wisconsin and Ohio and offers a variety of specialty film
and flexible packaging products. The acquisition provides Charter
NEX with highly complementary production capabilities in films, roll-
stock, and converting. Optimum has annual revenues of more than
$100 million.
December 2015 – ProAmpac LLC, a leading flexible packaging plat-
form owned by Wellspring Capital Management, has acquired Coating
Excellence International (CEI) from investment firm Mason Wells. CEI,
which has over 900,000 square feet of manufacturing space at its
two Wisconsin facilities, produces a range of flexible packaging prod-
ucts and woven poly bags. ProAmpac, which is the result of a recent
merger between large industry players Prolamina and Ampac, will
add capacity and expand its share of the US flexible packaging mar-
ket via the acquisition. CEI, which has annual sales of approximately
$250 million, is the first acquisition for ProAmpac since being formed
in the August 2015 merger.
TRENDS IN M&A
• Transactions involving film extruders and converters were down by 6 deals
in 2015, versus 2014, as both financial and strategic buyers completed
slightly fewer deals within the sector
• Buyer type transaction mix in the film segment shifted in 2015, as public
acquirers represented a greater share of strategic acquisitions, driving
a 6% year over year increase in the proportion of deals completed by
strategic buyers
• Cross-border film M&A featured a declining number of foreign buyers
acquiring U.S. targets, down by 50% in 2015 compared to 2014, while
overseas buying by U.S.-based processors was also down
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014 2015
51 48 45
23
41
19
36
29
37
22
27 27
78 7568
6065
59
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F I N A N C I A LS T R AT E G I C
2014 2015
U.S.-to-U.S. 12 12
U.S.-to-Foreign 3 3
Foreign-to-U.S. 4 2
Foreign 46 42
Total 65 59
Distressed 2 1
W W W. P M C F. C O M | 7
Global Resin and Color & Compounding M&A
Sources: P&M Corporate Finance, Plastics News, Company Reports
2 0 1 4 2 0 1 5
5%
47%
22%
26%
8%
44%
24%
24%
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2 0 1 4 2 0 1 5
40%60%
30%
70%
C O L O R &C O M P O U N D I N G
C O L O R &C O M P O U N D I N G
R E S I NS U P P L I E R
R E S I NS U P P L I E R
TRANSACTIONS BY BUYER T YPE
TRANSACTION SECTOR DETAIL
BUYER T YPE
SECTOR DEAL STATISTICS
FEATURED SECTOR TRANSACTIONS
October 2015 – Belgium-based Solvay SA (EBR: SOLB), a leading
supplier of materials to plastics industry, has acquired the long-fi-
ber thermoplastics (LFT) business and technology of Epic Polymers
GmbH. Epic Polymers is a German manufacturer of engineered ther-
moplastics for a variety of industrial applications. The acquisition of
Epic Polymers’ LFT business will strengthen Solvay’s position in ther-
moplastics and support the company’s plan to expand its structur-
al lightweighting capabilities. Epic’s LFT are progressively replacing
metal structural components in both automotive and aerospace end
markets. The LFT technology will complement Solvay’s multi-billion
dollar July 2015 acquisition of composites resin supplier Cytec Indus-
tries, as the company actively expands its composites and lightweight
resin systems business. Solvay generated $10.6 billion in sales
during 2014.
December 2015 – Chemline, Inc. has acquired California-based T.A.
Davies Company, a producer of specialty polyurethane resins. T.A. Da-
vies provides a range of polyurethane systems and custom formula-
tions suitable for open casting, rotomolding and machine dispensing.
The acquisition, which is a first for St. Louis, Missouri-based Chem-
line, will provide additional capacity and complementary product
lines for the company’s rapidly growing polyurethane business. The
T.A. Davies acquisition also adds a West Coast manufacturing facility
to Chemline’s growing footprint.
TRENDS IN M&A
• Transactions involving resin suppliers and color & compounders were
down 25% year-over-year following a multi-year high point for segment
M&A activity in 2014
• Resin suppliers accounted for 70% of transaction mix in 2015 versus color
and compounding deals, a 10% increase in their proportion of total deal
volume versus the comparison period
• The declining number of domestic transactions involving the sale of U.S.
resin suppliers and color & compounders was a significant driver of the
overall decrease in deal volume, falling by 11 deals in 2015 compared to
2014 levels and reflecting in part the higher level of consolidation in
North America
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014 2015
58 42 44
18
52
16
53
19
37
17
13
14
71
5662
6872
54
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F I N A N C I A LS T R AT E G I C
2014 2015
U.S.-to-U.S. 21 10
U.S.-to-Foreign 5 3
Foreign-to-U.S. 6 6
Foreign 40 35
Total 72 54
Distressed 3 -
8 | M & A Q UA R T E R LY — P L A ST I C & PAC K AG I N G
2 0 1 4 2 0 1 5
30%35%
35%
3%
47%
33%
17%
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P E t o P E
Global Sheet and Thermoforming M&A
2014 2015
Food & Beverage 7 14
Industrial 11 6
Consumer 2 5
Construction - 1
Medical 1 1
Automotive - 1
Transportation 2 2
Electronics - -
Total 23 30
Sources: P&M Corporate Finance, Plastics News, Company Reports
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
BUYER T YPE
SECTOR DEAL STATISTICS
FEATURED SECTOR TRANSACTIONS
November 2015 – TEQ Packaging, a subsidiary of publicly traded
ESCO Technologies (NYSE:ESE), has acquired Indiana-based thermo-
former Fremont Plastics. Fremont produces thermoformed medical
disposables for the surgical suite including light handle covers and
tray packaging for instruments. The acquisition of Fremont expands
TEQ’s medical thermoforming capabilities and provides a range of
new product applications. Fremont has two state of the art clean
rooms and runs six thermoforming lines which add significant capac-
ity to TEQ’s growing thermoforming operation. PMCF served as the
exclusive financial advisor to Fremont.
November 2015 – Group Guillin (ENXTPA:ALGIL), a leading European
producer of thermoformed trays and packaging to the food industry,
has acquired Kreis Pack. Poland-based Kreis Pack manufactures and
distributes a variety of thermoformed and injection molded dispos-
able plastic food packaging products. Kreis Pack’s products include
containers, cups, lids, and trays. The acquisition, which is Group Guil-
lin’s first since 2010, aligns with the company’s strategic initiative to
increase its Polish presence and expand its portfolio of food pack-
aging products. Group Guillin generated more than $558 million in
annual sales for 2015.
TRENDS IN M&A
• Sheet and thermoforming transactions were up by 7 deals in 2015, an
increase of 30% compared to 2014, as deal volume tracked more toward
historical levels following an abnormally low 2014
• Food & Beverage deals represented the greatest proportion of transaction
mix in 2015, as the number of transactions involving sheet and
thermoforming businesses focused on the food & beverage end market
doubled year over year
• Foreign sheet and thermoforming deals represented more than 70% of
total transaction volume in 2015, reflecting buyers’ overseas focus given
the high levels of consolidation within the US market
0
5
10
15
20
25
30
35
40
2010 2011 2012 2013 2014 2015
13 21 20
12
22
16
15
8
19
11
12
1125
32 32
38
23
30
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F I N A N C I A LS T R AT E G I C
2014 2015
U.S.-to-U.S. 7 6
U.S.-to-Foreign - 2
Foreign-to-U.S. 2 2
Foreign 14 20
Total 23 30
Distressed 1 -
W W W. P M C F. C O M | 9
Global Blow Molding M&A
Sources: P&M Corporate Finance, Plastics News, Company Reports
2 0 1 4 2 0 1 5
30%
30%
27%
4%
46%
32%
18%
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E Q U I T Y ( P E )
P E t o P E
13%P E t o P E
2014 2015
Food & Beverage 13 8
Industrial 4 6
Consumer 4 6
Construction - -
Medical - 1
Automotive 2 1
Transportation - -
Electronics - -
Total 23 22
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
BUYER T YPE
FEATURED SECTOR TRANSACTIONS
October 2015 – Carr Management, Inc., a portfolio company of in-
vestment firm Behrman Capital, completed an acquisition of Massa-
chusetts-based Hillside Plastics, Inc. Hillside is a producer of blow
molded containers, including the proprietary Sugarhill Pure Maple
Syrup jug product line. Carr Management, headquartered in Nash-
ua, New Hampshire, is a specialized manufacturer of blow-molded,
HDPE bottles for the dairy, water, food, industrial, and nutraceutical
industries. The Hillside deal, which is Carr Management’s fist acquisi-
tion since partnering with Behrman Capital in October 2014, will add
highly complementary product lines and manufacturing capabilities
to Carr’s current platform. PMCF served as the exclusive financial ad-
visor to Hillside.
October 2015 – Consolidated Container Co. (CCC), a leading plastic
packaging platform backed by Bain Capital, has acquired the assets
of Precision Plastics Inc. Precision Plastics is based in Chippewa
Falls, WI and primarily produces HDPE containers for the dairy indus-
try. The Precision Plastics deal adds a Wisconsin production facility
for CCC, filling a gap in the company’s US manufacturing footprint,
and providing CCC with its 55th rigid packaging manufacturing plant.
TRENDS IN M&A
• Blow molding M&A activity recorded a third year of healthy, but flat activity
in 2015, with sector deal volume down by one deal compared to 2014
• Transactions by end market shifted in 2015, despite flat overall growth,
as both industrial and consumer end markets saw increased deal flow.
Conversely food & beverage transactions fell by 38%
• Publicly traded strategic buyers were more acquisitive in 2015 relative to
2014, driving a 7% increase in the proportion of total blow molding deals
completed by strategic buyers year over year
0
5
10
15
20
25
30
2010 2011 2012 2013 2014 2015
17 10 15
15
11
11
13
10
14
8
10
8
27
18
30
22 23 22
NU
MB
ER
OF
DE
AL
S
F I N A N C I A LS T R AT E G I C
SECTOR DEAL STATISTICS
2014 2015
U.S.-to-U.S. 7 3
U.S.-to-Foreign 1 -
Foreign-to-U.S. 1 1
Foreign 14 18
Total 23 22
Distressed 4 2
10 | M & A Q UA R T E R LY — P L A ST I C & PAC K AG I N G
2014 2015
Food & Beverage 3 4
Industrial 22 26
Consumer 4 6
Construction 29 17
Medical 5 1
Automotive 1 4
Transportation 4 2
Electronics - 1
Total 68 61
TRANSACTIONS BY BUYER T YPE
TRANSACTIONS BY END MARKET
Additional Global Specialty Sector Activity
TRENDS IN M&A
• M&A activity in 2015 involving specialty plastic process types, including
rotational molding, foam, pipe & tube, profile extrusion, and composites,
declined by 7 deals, or 10% year over year
• Mix between financial and strategic buyers shifted in 2015 as M&A activity
among financial buyers rose significantly, accounting for 44% of specialty
M&A volume versus 24% in 2014
• Industrial and construction remained the most active end markets for
transactions in the specialty segment, despite a 41% year over year
decline in the number of construction deals
FEATURED SECTOR TRANSACTIONS
Foam
November 2015 – Investment firm Charterhouse Capital Partners’
portfolio company Armacell S.A. has been acquired by private eq-
uity investors Blackstone (NYSE:BX) and Kirkbi A/S. German-based
Armacell is a leading manufacturer of flexible insulation foams for
mechanical equipment. Armacell’s two main business segments in-
clude specialized foam insulation and light engineered foams. The
company’s end market applications include commercial, residential,
construction, industrial, oil & gas, and automotive. Armacell current-
ly operates in Europe, the Middle East, India, Asia, North America
and South America. Armacell will use Blackstone’s significant capital
resources and expertise to expand their international footprint and
guide the company through its next phase of strategic growth. Arma-
cell generated more than $500 million of sales in 2014.
December 2015 – Foam manufacturer PFB Corporation (TSX: PFB)
has acquired Poly Foam Inc. via its subsidiary Plasti-Fab. Poly Foam
produces a variety of foam applications including roofing insulation,
protective packaging and flotation. PFB is a vertically integrated
manufacturer of insulating products. PFB’s energy efficient foam
products use polystyrene technology in residential and commercial
structures. PFB will add additional capacity for its insulation prod-
ucts business while maintaining Poly Foam’s injection and foam
molded plastics operation at the Minnesota facility. Canada-based
PFB will use the Poly Foam acquisition to bolster its US presence and
expand its presence in the regional building material market.
Fabrication
October 2015 – Plastic parts fabricator and distributor National
Plastics & Seals has acquired Innovative Acrylic Design (IAD). IAD
manufactures custom plastic point-of-purchase displays and cham-
bers for a variety of end market applications. Following the acquisi-
tion National Plastics consolidated the manufacturing operation of
IAD into its Schaumberg, IL-based production facility. IAD adds laser
cutting and engraving capabilities for National Plastics’, which bol-
sters the company’s custom plastic design and prototyping capabili-
ties. National Plastics retained IAD’s brand name and management
team following the acquisition.
0
20
40
60
80
100
2010 2011 2012 2013 2014 2015
57 32 53
27
30
24
52
16
34
27
29
28
86
60
80
54
6861
NU
MB
ER
OF
DE
AL
S
F I N A N C I A LS T R AT E G I C
Source: P&M Corporate Finance, Plastics News, Company Reports
W W W. P M C F. C O M | 11
§ Plastics companies tracked in the PMCF Plastics & Packaging Index slightly outperformed the S&P 500 at the closing of Q4 2015, despite being below or in parity with the S&P 500 index through most of the fourth quarter of the year
§ Publicly traded plastics and packaging companies experienced declining EV/EBITDA valuations in the second half of 2015 following a valuation high point in the second quarter of the year
*Includes all disclosed transactions with at least one U.S. party Sources: Capital IQ, Pitchbook, and PMCF Estimates
§ U.S. middle market M&A activity was relatively flat in 2015, compared to 2014, with both total deal volume and total transaction value down slightly
§ U.S. private equity activity declined in terms of both deal volume and capital invested, despite high levels of uninvested capital, as the supply of quality acquisition targets has dwindled after years of sustained activity
PMCF Plastics and Packaging Index
S&P 500 Index
PMCF Plastics & Packaging Index Valuation
Note: Chart highlights relative stock price return
Note: Multiples based on most recent data available as of printing
M&A Quarterly – Plastics & Packaging
www.pmcf.com
10
PMCF Plastics & Packaging Index
U.S. Middle Market Transaction Summary (All Industries)
Source: Capital IQ
NOTE: PREGRAPHICS VERSION
80.00%
90.00%
100.00%
110.00%
120.00%
130.00%
140.00%
Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15Revenue Multiple
Average 1.2x 1.2x 1.2x 1.2x 1.2x 1.3x 1.4x 1.4x 1.3xMedian 1.1x 1.1x 1.1x 1.2x 1.1x 1.2x 1.3x 1.3x 1.2x
EBITDA MultipleAverage 9.4x 9.3x 9.3x 9.3x 9.2x 10.6x 11.8x 11.5x 10.8xMedian 8.6x 8.8x 9.1x 9.2x 8.7x 10.2x 10.4x 9.8x 10.1x
1153110342
1431516126
18133
16027
18624 18337
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
2008 2009 2010 2011 2012 2013 2014 2015
U.S. M&A Activity: D eals < $500 MillionDollars in Billions
D eal Volume D eal Value
2382
1605
24082686
3120 3265
39233602
$-‐
$200
$400
$600
$800
$1,000
$1,200
$1,400
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2008 2009 2010 2011 2012 2013 2014 2015
Private Equity InvestmentsDollars in Billions
D eal Volume Capital Invested*Includes all disclosed transactions with at least one U.S. partySources: Capital IQ, Pitchbook, and PMCF Estimates
• U.S. middle market M&A activity was relatively flat in 2015, compared to 2014, with both total deal volume and total transaction value down slightly
• U.S. private equity activity declined in terms of both deal volume and capital invested, despite high levels of uninvested capital, as the supply of quality acquisition targets has dwindled after years of sustained activity
• Plastics companies tracked in the PMCF Plastics & Packaging Index slightly outperformed the S&P 500 at the closing of Q4 2015, despite being below or in parity with the S&P 500 index through most of the fourth quarter of the year
• Publicly traded plastics and packaging companies experienced declining EV/EBITDA valuations in the second half of 2015 following a valuation high point in the second quarter of the year
Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15
Revenue Multiple
Average 1.2x 1.2x 1.2x 1.2x 1.2x 1.3x 1.4x 1.4x 1.3x
Median 1.1x 1.1x 1.1x 1.2x 1.1x 1.2x 1.3x 1.3x 1.2x
EBITDA Multiple
Average 9.4x 9.3x 9.3x 9.3x 9.2x 10.6x 11.8x 11.5x 10.8x
Median 8.6x 8.8x 9.1x 9.2x 8.7x 10.2x 10.4x 9.8x 10.1x
PMCF PL ASTICS & PACKAGING INDEX VALUATION
U.S. M&A ACTIVIT Y: DEAL S < $500 MILLION (dollars in billions)
PRIVATE EQUIT Y INVESTMENTS (dollars in billions)
PMCF Plastics & Packaging Index
02000400060008000
100001200014000160001800020000
2008 2009 2010 2011 2012 2013 2014 2015
D I S C L O S E D D E A L VA L U ED E A L V O L U M E
11,53110,324
14,31516,126
18,133
16,027
18,624 18,337
0$50$100$150$200$250$300$350$400$450$500
*Includes all disclosed transactions with at least one U.S. partySources: Capital IQ, Pitchbook, and PMCF Estimates
2008 2009 2010 2011 2012 2013 2014 20150
500
1000
1500
2000
2500
3000
3500
4000
4500
C A P I TA L I N V E S T E DD E A L V O L U M E
2,382
1,605
2,4082,686
3,1203,265
3,9233,602
0
$200
$400
$600
$800
$1,000
$1,200
$1,400
PMCF Plastics and Packaging Index
This market overview is not an offer to sell or a solicitation of an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or 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. 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.
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www.pmcf.com
Notable Awards for PMCF:
NOTE: PREGRAPHICS VERSION
2013 Industrial Manufacturing/Distribu7on
Deal of the Year
2015 FINALIST
This market overview is not an offer to sell or a solicitation of an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or 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 oth-er 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.
Suite 425Two Towne SquareSouthfield, MI 48076
NOTABLE AWARDS FOR PMCF:
WWW.PMCF.COM