During the pandemic, many of us made lists of things we would do if things got back to normal.
For some people, things on this list were as easy as going back to a restaurant or going on a trip. Judging by recent market activity, many corporations and private equity firms had “bought a plastics company” on their own normalization lists.
Plastics News has reported on 26 M&A deals since the beginning of April. That’s a pretty large number of stories on the same subject in less than two months.
A current example is the New York-based private equity firm The Jordan Co. LP, which is acquiring a majority stake in the plastics processor Spartech LLC from another PE company, Nautic Partners of Providence, according to Plastics News, one of the 50 largest thermoformers in the Region.
Active buyers have stayed active. PPC Flexible Packaging LLC acquired Target Labels & Packaging LLC, a manufacturer of packaging labels, rolls and bags in North Salt Lake, Utah. It is the second deal in six months and the seventh in less than four years for Buffalo Grove, Illinois, a supplier of custom flexible packaging, PPC.
RV giant Patrick Industries Inc. of Elkhart, Indiana, closed three deals in 2021, including two in the last six weeks. During that time, it acquired Alpha Systems LLC, an Elkhart-based manufacturer of thermoplastic polyolefin membrane roofs for RVs, and Hyperform Inc., a Florida-based manufacturer of non-slip foam floors sold under the SeaDek brand.
Evidence that PN did not envision plastic M&A rebounding from 2020 uncertainties came from P&M Corporate Finance of Southfield, Mich. M&A activity in both plastics and packaging sectors has grown from the impact of COVID- 19 recovered. “
Global plastics M&A volume recorded 36 transactions in March, according to PMCF. That’s a 50 percent year-over-year increase and not far from the monthly high for the sector, officials said. Strategic and PE add-on buyers were responsible for all of the growth in transaction activity for the month, while PE platform deals were on par with last year.
PMCF added that global plastics transactions were up 38 percent year-over-year and are on track to surpass pre-COVID-19 activity levels for the year. The volume of 101 transactions in the first three months represents the highest quarterly activity in the last six years, according to PMCF data.
“We’re not sure how the full year will end, but the current momentum in M&A markets would signal the continuation of the high level of activity,” officials said.
The total volume of M&A deals in plastics declined 15 percent for full-year 2020, according to PMCF, but improved over the course of the year and many companies realized they would survive the pandemic. The transaction volume in the second half of 2020 was essentially unchanged compared to the same period in 2019.
In PN’s M&A outlook in January, many finance professionals were optimistic for 2021. PMCF Managing Director John Hart said in the report that his company “is encouraged by the resilience of the plastics industry and M&A.”
Based on what we’ve seen so far in 2021, it looks like these bright prospects for M&A in plastics will come true.
Frank Esposito is a senior reporter for Plastics News. Follow him on Twitter @ fesposito22.