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Plastics & Packaging monitorSeptember 2013
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top news in Plastics & PackagingAugust 30, 2013 – Global demand for thermoplastic elastomers is projected to rise 5.5% annually, reaching more than $20 billion in 2017, according to a new study from The Freedonia Group. Growth is expected to be driven by product innovation that will allow thermoplastic elastomers to replace more traditionally used elastomers and thermoplas-tics. Weight reduction and improved fuel economy in new vehicles is expected to be a major driver of thermoplastic elastomer growth as well. The study cites that China will remain the world’s largest consumer of thermoplastic elastomers by volume and is ex-pected to see more than 8% growth in demand annually. Styrenic block copolymers are projected to remain the leading thermoplastic elastomer product type; however, growth in styrenic block copolymers are expected to be slower than the overall average for ther-moplastic elastomers.August 21, 2013 – Australia-based Amcor Ltd. (ASX:AMC) announced its plans to split into two separate publicly traded companies: Amcor Ltd. and Australasian and Pack-aging Distribution Ltd. (AAPD). Amcor will retain its plastics divisions while AAPD will contain the fiber, glass, and beverage can packaging operations in Australia and New Zealand, and Amcor’s packaging distribution operations in North America and Australia. The split will allow Amcor to focus on rigid and flexible plastics and tobacco packaging, its core business, while AAPD, with approximately $1.8 billion in revenue, will be posi-tioned to experience significant cost savings over the next three years.August 14, 2013 – Klockner Pentaplast Group, a global manufacturer of films, appears to be for sale just a year after being acquired by Greenwich, CT-based PE firm Strategic Value Partners Investment Group. Bloomberg News reported that Strategic Value Part-ners was working with investment bankers to find a buyer for the company. Headquar-tered in Montabaur, Germany, Klockner Pentaplast employs over 3,000 people across 17 plants worldwide and generated sales of nearly $1.6 billion during its most recent fiscal year. Klockner Pentaplast is considered to be the world’s largest producers of films for pharmaceutical, medical device, food, electronics, and general-purpose thermoformed packaging. The company also makes film for printing and specialty applications.August 12, 2013 – Worldwide demand for medical device packaging is projected to rise 5.9% per year to reach $25.7 billion in 2017, according to a new study from The Freedo-nia Group. The study cites the fastest growing medical device packaging markets will emerge in prosperous Africa and Middle-East countries, as well as India, Mexico, and China due to diversification, expansion, and stricter regulation of medical product in-dustries raising the quality of containers and related accessories. Western Europe, the United States, and Japan, representing 60% of the total market, are expected to experi-ence below average growth amid stiff competition and pressure to contain healthcare costs. Pouches and trays are expected to lead sales growth followed by sales of multiple compartment trays, blister packs, and clamshell packs, which are expected to experi-ence above average growth in the coming years.August 7, 2013 – According to the German-based research firm Ceresana Research, global demand for plastic film will reach 71 million metric tons by 2020, representing an annual compound growth rate of 3.7%. Demand for plastic film is expected to be driven by the wide variety of applications as well as the many advantages that plastic films of-fer compared to flexible packaging derived from materials such as paper or aluminum foil. The food & beverage sector is expected to outpace growth in all other end markets due to increasing global demand for portable food products. The plastic film market is also expected to diversify over the next decade, as BOPP and PET films are growing due to their use in high-quality packaging; films based on polyethylene (LDPE, LLDPE, HDPE) currently account for nearly three quarters of the plastic film market. Markets in Asia, South America, the Middle East, and parts of Eastern Europe will show the most dynamic growth and China and India will account for a third of the market by 2020, according to the report.
Select Transactions in Plastics & Packaging Page 3
Plastics & Packaging Equity Valuation Page 4
Plastics & Packaging Transaction Statistics Page 5
www.pmcf.com
John [email protected]
Matt [email protected]
ryan [email protected]
Sources: Plastics News, Freedonia Group, Ceresana Research , Company Websites
John Hartco-lead, Plastics & Packaging
matt Jamisonco-lead, Plastics & Packaging
about PmcFP&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 Cor-porate Finance International affiliates. 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 and Acquisitions • Strategic Assessments• Sales and Divestitures • Fairness Opinions • Capital Raising
cHicago225 W. Washington St., Suite 2700
Chicago, IL 60606312.602.3600
Detroit26300 Northwestern Highway, Suite 120
Southfield, MI 48076248.223.3300
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 registra-tion requirements in such jurisdiction.
has been acquired by
Products, LP
a portfolio company of
has been acquired by
Source: CapIQ, PMCF, and Company Reports
Plastics & Packaging Monitor – September 2013
P&M Corporate Finance, LLC
3
select transactions in Plastics & Packaging
Featured transaction – PackagingJuly 29, 2013 — New Concord, OH-based The Fabri-Form Company was sold to Portage, WI-based Penda Corporation, a portfolio company of Resilience Capital Partners, forming a new entity that will be called Penda Fabri-Form Corporation and headquartered in New Concord, Ohio.According to Plastics News’ most recent ranking of North American thermoformers, Fabri-Form, a thermoformer of material handling, packaging, and engineered components for heavy truck, automotive, and grocery markets, and Pen-da were ranked 28th and 17th, respectively, creating com-bined estimated sales of $185 million – placing them in the top 10 largest thermoformers.P&M Corporate Finance served as the exclusive financial ad-visor to The Fabri-Form Company.
Featured transaction – marquee DealAugust 13, 2013 — Stamford, CT-based Silgan Holdings Inc. announced its acquisition of Naperville, IL-based Portola Packaging Inc. for $266 million. Portola is a leading manufac-turer of plastic closures and bottles for the food and beverage industries.With 8 plants across North America and Europe, Portola will help strengthen Silgan’s global closure business. In state-ment made by Silgan CFO Bob Lewis, he said “we are excited about the opportunity to expand our relatively small Europe-an plastic closure presence through Portola’s manufacturing facilities in the United Kingdom and Czech Republic.”Portola generated $200 million in revenue for 2012 and is expected to increase Silgan’s earnings per share by 5 to 10 cents in 2014.
Date Buyer Target Industry/ Application
Enterprise Value ($mm) EV/EBITDA
Sheet & Thermoforming
Specialty Processes (Rotomolding, Form, Profile Extrusion, & Other)
Injection Molding
Film
Blow Molding
Resin and Color & Compounding
1-Jun-13 IPN DD Polyplast Pvt Ltd Consumer - -5-Jun-13 PM & Partners SpA Plastiape S.p.A. Medical 92.9 -24-Jun-13 Molded Devices, Inc. Dempsey Industries Consumer - -1-Jul-13 Nypro, Inc. Nypro Kánaak, Inc. Medical 17.6 -8-Jul-13 Intertech Plastics, Inc. IMAGE Molding Inc. Medical - -19-Jul-13 Electrical Components International, Inc. Incaelec SL Electronics - -1-Aug-13 Pancon Corporation Sunstone Components Group Inc. Electronics 4.0 -5-Aug-13 Hopkins Manufacturing Corporation Mallory Industries Inc. Consumer - -8-Aug-13 Dongkook Ind. Co., Ltd. (KOSE:A001620) Innovative Components Technologies GmbH Automotive - -13-Aug-13 Silgan Holdings Inc. (NasdaqGS:SLGN) Portola Packaging Inc. Food & Beverage 266.0 -15-Aug-13 DuBois Limited Infiniti Media Inc Consumer - -16-Aug-13 Lagercrantz Group AB (OM:LAGR B) Asept International AB Food & Beverage - -28-Aug-13 Flextronics International Ltd. (NasdaqGS:FLEX) RIWISA AG Medical - -31-Aug-13 Laxmi Electronics Ltd SKT GmbH Automotive - -
25-Jun-13 Sodiaal Union 3A SAS Food & Beverage - -1-Jul-13 Kunststofftechnik & Maschinenbau Markus Jud JKAPLAST AG Consumer - -2-Jul-13 Semadeni AG Logo-Plastic AG Industrial - -3-Jul-13 The Carlyle Group LP (NasdaqGS:CG) Chesapeake Limited Industrial - -15-Aug-13 Nexus Group San Miguel Industrias PET S.A. Food & Beverage - -
10-Jun-13 Asahi Kasei Chemicals Corporation Asahi-DuPont POM (Zhangjiagang) Co., Ltd. Automotive - -8-Jul-13 Huntsman Corporation (NYSE:HUN) Oxid LP Industrial - -9-Jul-13 Michelman Inc Ecronova Polymer GmbH Construction - -18-Jul-13 Allnex Belgium SA Bayer MaterialScience AG, Desmolux Industrial - -19-Jul-13 RP Compounds GmbH Styron Europe GmbH, Expandable Polystyrene Business Industrial - -1-Aug-13 Axson US, Inc. ADTECH Plastic Systems Corp. Industrial - -2-Aug-13 SK Capital Partners Clariant Pakistan Limited (KASE:CPL) Industrial 57.1 4.4x12-Aug-13 NMC Cellfoam AB Sundquist Components AB Industrial - -28-Aug-13 Bemis Associates Inc. polyVISIONS, Inc. Industrial - -
7-Jun-13 Pro-Pac Packaging Limited (ASX:PPG) Poly Products Co Pty Ltd Industrial - -1-Jul-13 Avtokomponent Management Company Plastik Public Joint Stock Company Food & Beverage - -1-Jul-13 Amcor Limited (ASX:AMC) Shenda-Flexible packaging Medical 57.1 -2-Aug-13 Tadbik Pack SA (Pty) Limited Alex White & Co (Pty) Ltd. Food & Beverage - -7-Aug-13 Inteplast Group, Ltd. Trinity Plastics, Inc. Food & Beverage - -20-Aug-13 Polymer Group, Inc. Fiberweb plc (LSE:FWEB) Industrial 258.5 5.8x
5-Jun-13 PAR Group Ltd Industrial Anti-Corrosives Limited Industrial - -5-Jun-13 WNA, Inc. Par-Pak Ltd. Food & Beverage 300.0 -17-Jun-13 Duni AB (publ) (OM:DUNI) Song Seng Associates Pte Ltd Food & Beverage 12.0 -8-Jul-13 Madison Dearborn Partners, LLC Multi Packaging Solutions, Inc. Medical - -15-Jul-13 Polystrom Plastics Pty Ltd YPP Productions Industrial 25.0 -29-Jul-13 Penda Corporation The Fabri-Form Company Industrial - -
4-Jun-13 Brookside Equity Partners; Scott Capital Partners, LLC Valterra Products, Inc. Industrial - -17-Jun-13 Soudal N.V. TKK Srpenica d.d. Construction - -25-Jun-13 Long Point Capital, Inc. Precision Products Group, Inc. Medical - -5-Jul-13 Naylor Drainage Ltd Amco Plastics Ltd. Construction - -9-Jul-13 Vention Medical, Inc. RiverTech Medical LLC Medical - -15-Jul-13 Polymer Industries, LLC Nytef Group, Inc. Construction - -29-Jul-13 Pexco LLC Scandia Plastics, Inc. Medical - -19-Aug-13 Ares Management LLC CPG International, Inc. Construction - -27-Aug-13 Industrial Services Group, Inc. Compositech Construction - -
Plastics & Packaging Monitor – September 2013
www.pmcf.com
4
Plastics & Packaging equity Valuation
Income Statement data as of last period date reported
Currency conversion rate as of 8/31/2013
Source: Capital IQ ^Based on available Capital IQ Analyst summaries* Excludes Berry Plastics Group
**Excludes Trex Co.
Performance of PmcF indices vs. s&P 500 PmcF key takeaways and analysis • The Color & Compounding component of the PMCF Index
trades at the highest levels of the index, a 10.2x EBITDA multiple, now higher than the large packaging average.
• Aside from Color & Compounding, all other PMCF com-ponents experienced multiple increases through August 2013, with each component trading well above its 3-year average.
• The Diversified component continued to trade at the high-est levels of the PMCF Index while the Color & Compound-ing component was the index’s strongest performing sec-tor over the last 3 months, growing approximately 7.2%. Each of the other components outperformed the S&P 500 during the period.
Aug-10Nov-1
0Feb-11
May-11
Aug-11Nov-1
1Feb-12
May-12
Aug-12Nov-1
2Feb-13
May-13
Aug-13
S&P 500Large Mid C&C Diversified
50%
100%
150%
200%
250%
% re
turn
Company Name Symbol LTMRevenue
LTMEBITDA
Market Cap
Price/Earnings Current 3 Year
Average Projected^
Financials / Metrics ($USD) (8/31/11) EV / EBITDA Multiples
Large Packaging (Large)
Large Average
Mid-Size Packaging (Mid)
Mid-Size Average
Color & Compounders (C&C)
C&C Average
Diversified and Industrial Plastics (Diversified)
Diversified Average
$
$ $ $
$ $ $
$ $ $
$ $ $ $
$ $ $ $
$ $ $ $
$ $ $
$ $ $ Amcor Ltd. ASX:AMC 11,375 1,297 11,195 21.3x 11.5x 10.3x 0.0xAptarGroup, Inc. NYSE:ATR 2,420 427 3,898 24.0x 9.6x 8.5x 9.1xAvery Dennison Corp. NYSE:AVY 6,153 661 4,194 20.4x 8.1x 7.5x 8.0xBemis Co. Inc. NYSE:BMS 5,074 628 4,095
21.9x 8.6x 7.8x 8.5x
Rexam plc LSE:REX 6,592 968 5,936 15.3x 8.2x 7.6x NASealed Air Corp. NYSE:SEE 7,692 998 5,563 NM 9.5x 7.8x 9.1xSilgan Holdings Inc. NasdaqGS:SLGN 3,674 503
2,991 16.5x 9.5x 8.6x 9.0xSonoco Products Co. NYSE:SON 4,777
567
3,739
18.7x
8.0x 7.3x 7.9x
5,823
758
4,918
19.7x*
9.1x 8.2x 7.5x
AEP Industries Inc. NasdaqGS:AEPI 1,141 66 438 17.4x
8.3x 8.3x NACCL Industries, Inc. TSX:CCL.B 1,286 255 2,344 25.0x
9.7x 6.5x 8.7xMulti-Color Corp. NasdaqGS:LABL 662 110 512 17.7x
8.2x 8.4x NARPC Group plc LSE:RPC 1,596 180 1,156 29.2x
7.9x 7.2x NATredegar Corp. NYSE:TG 935 110 714 15.3x
7.3x 6.7x NAWinpak, Ltd. TSX:WPK 686 133 1,325
18.2x
9.1x 7.0x 9.0x1,051
142
1,082
20.5x
8.4x 7.4x 8.9x
A. Schulman, Inc. NasdaqGS:SHLM 2,139
117
793 17.9x 7.7x 7.3x 7.7xClariant AG SWX:CLN 6,412
833
5,118 19.4x 8.3x 5.7x NACytec Industries, Inc. NYSE:CYT 1,917
351
2,728 26.6x 8.9x 7.9x 8.4xFerro Corp. NYSE:FOE 1,686
60
636 NM 15.7x 7.1x 7.5xPolyOne Corp. NYSE:POL 3,329
291
2,620 28.3x 10.4x 7.4x 9.3x3,097
330
2,379
23.0x
10.2x 7.1x 8.2x
Filtrona plc. LSE:FLTR 3,932 547
2,797 14.2x 8.1x 8.0x 6.3x
Intertape Polymer Group, Inc. TSX:ITP 778 93
835 45.9x 10.6x 8.0x 9.5xJarden Corp. NYSE:JAH 6,865 777
4,827 24.4x 10.3x 8.8x 9.2xMyers Industries, Inc. NYSE:MYE 830 88
624
20.6x
7.9x 7.7x 7.1xPlastic Omnium SA ENXTPA:POM 6,479 623
3,223
14.0x
6.2x 4.9x NASimona AG DB:SIM 370 29
250
20.8x
6.5x 5.9x NA
Trex Co. Inc. NYSE:TREX 323 37
744
45.2x
19.8x 19.1x 12.0x2,797 313 1,900 18.8x** 8.3x** 7.2x* 8.0x**
Berry Plastics Group NYSE:BERY 4,647 775 2,653 49.4x 8.5x 8.6x 8.2x
0%
50%
100%
150%
200%
250%
300%
Large Mid-Sized Color & Compounding Diversified S&P 500 Index (^SPX) - Index Value
Plastics & Packaging Monitor – September 2013
www.pmcf.com
5
Jun 13 Jul 13 Aug 13Mar 13 Apr 13 May 13Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13
1,011Strategic Financial Add-on Financial Platform
19
24
15 17 23
10
2227
128
13
1923
21
11
5
7
4 6
7
8
106
2
2
3
64
5
6
10
5
4
8
7
5
115
2
3
5
3
76
3
3436
23
31
37
23
43
38
16
13
21
28
3432
20
0
5
10
15
20
25
30
35
40
45
50
Plastics & Packaging transaction statistics
Plastics & Packaging transactions (Jun ‘12 – aug ‘13) transactions by end market
PmcF key takeaways & analysisTransaction volume for the Plastics and Packaging industry from June 2013 through August 2013 was characterized by the following trends:• Overall plastic and packaging transaction volume from
June 2013 to August 2013 decreased by 7 deals versus the same period one year earlier
• Average monthly deal activity from June 2013 to August 2013 reached 29 deals, approximately equivalent to the monthly average of 29 deals per month for the entire pe-riod from June 2012 to August 2013
• Transaction mix among financial and strategic buyers shifted slightly toward more strategic acquisitions for the period from June 2013 to August 2013 versus the com-parison period as financial buyers accounted for approxi-mately 36% of total deal volume compared to 38% a year earlier
• M&A activity involving packaging companies remained strong as total transaction volume increased approximate-ly 30% versus the comparison period
• Sheet and thermoforming transactions experienced the largest increase as a percentage of total deals, accounting for 15% of transaction volume from June 2013 to August 2013 versus 8% during the same period one year ago
• Distressed deal activity remained low with only a single distressed deal from June 2013 through August 2013
Source: P&M Corporate Finance
transactions by Process type
Packaging transaction Detail
Distressed transaction Detail
Jun 12 – aug 12 Jun 13 – aug 13
% of Total
Dec–Jan 09–10
% of Total
Packaging DetailJun 12–Aug 12
% of Total
Jun 13–Aug 13
% of Total
Rigid Packaging 9 56.3% 20 64.5%
Flexible Packaging 6 37.5% 9 29.0%
Bottles 1 6.3% 2 6.5%
Total 16 100% 31 100%
% of Total
% of Total
Distressed 0 0.0% 1 1.2%
Jun 12–Aug 12
Jun 13–Aug 13
Blow Molding4%
Injection Molding
25%
Film23% Resin/Color &
Compounding20%
Sheet & Thermoforming
8%
Specialty20%
Blow Molding7%
Injection Molding
29%
Film13%
Specialty21%
Resin/Color & Compounding
15%
Sheet &Thermoforming
15%
Food & Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
End MarketJun 12- Aug 12
% of Total
Jun 13- Aug 13
% of Total
12 13% 15 17%
45 48% 22 26%
11 12% 11 13%6 6% 13 15%8 9% 12 14%7 8% 7 8%1 1% 2 2%3 3% 4 5%
93 100% 86 100%
John d. [email protected]
Matthew G. [email protected]
ryan r. [email protected]
dan M. ratliff [email protected]
scott s. [email protected]
www.pmcf.com
Suite 12026300 Northwestern HighwaySouthfield, MI 48076
PLASTICS & PACKAGING TRANSACTION UPDATE
PMCF CoMPletes sale oF therMoForMer the Fabri-ForM CoMPany
P&M Corporate Finance (PMCF) is pleased to announce that it served as the exclusive financial advisor to The Fabri-Form Company (Fabri-Form), of New Concord, OH. The buyer was Portage, WI-based Penda Corporation (Penda). Penda is a portfolio company of Resilience Capital Partners, of Cleveland, OH and Littlejohn & Co., of Greenwich, CT. The agreement combines the strengths of Penda and Fabri-Form by leveraging Penda’s global sales net-work and thermoforming resources with Fabri-Form’s custom engineering solutions and manufacturing technologies to deliver an unparalleled array of thermoformed solutions.
Fabri-Form’s shareholders selected PMCF’s Plastics & Packaging Group, led by John Hart, to conduct a sale process for the company. The Company’s goals in a transaction were finding a partner who could provide significant growth opportunities for Fabri-Form and its employees and equity diversifi-cation for the family shareholders.
For more information v is i t www.pmcf.com
