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PLASTICS & PACKAGING MONITORMAY 2012
INSIDE THIS ISSUETop News in PLASTICS & PACKAGINGApril 1, 2012 — According to a NPE 2012 speech by Michael Taylor of the Society of the Plastics Industry, the U.S. plastics industry is trending toward a return to pre-recession production levels by the end of the calendar year, barring any unexpected economic shocks in the U.S. or abroad. While SPI believes the overall plastics industry GDP has a good chance to recover, the trade association notes that jobs and the number of facilities will also recover but will lag slightly in returning to pre-recession levels. Across the U.S. plastics industry, resin com-panies expected strong performance, while the mold making sector continues to be problematic. April 2, 2012 — Attendance numbers for exhibitors reached record levels at NPE 2012 as the trade show opened in Orlando, FL, the first time in more than 40 years it was hosted outside of Chicago. According to the show’s operator, the Society of the Plastics Industry (SPI), exhibitors at this year’s show occupied more than 920,000 square feet, a 20% increase over the last NPE show held in 2009. In addition to a strong showing by event exhibitors, NPE 2012 also real-ized a large number of attendees including a significant international contingent accounting for nearly 20% of attendees, of which 40% were from the Latin Ameri-can region. The event also included nearly every major resin company including many which were not in attendance in 2009. April 4, 2012 — Rapid prototyping, is expected to reach $3.1 billion in global demand by 2016 according to a recent report by Fort Collins, CO-based Wohlers Associates, Inc. Wohlers expects the segment to continue growing at double-digit rates driven by the mainstreaming and subsequent cost reduction of 3D printers, which have become popular among students, researchers, hobbyists, inventors, and entrepreneurs. Further, rapid prototyping is forecast to continue strong growth after 2016 to reach nearly $5.2 billion by 2020. Rapid prototyping technology is expected to continue to be used in new creative and exotic applica-tions, including most recently to manufacture the complete body of a car.April 23, 2012 — Reports from the recent Chinaplas 2012 trade show indicate a positive outlook for the plastics industry in Asia, driven largely by packaging demand. China, which accounts for the largest share of the Asian packaging market, reached $90 billion in 2011 and is projected to expand by approximately 9.8% annually for the next several years. Among materials used for both rigid and flexible packaging products in China, plastic accounted for 33% of materials used in 2011 and is expected to reach 38% by 2016. Increased consumer aware-ness with regard to packaging and stringent regulatory efforts related to food packaging materials are expected to be an integral part of driving future growth in the Chinese packaging market.April 24, 2012 — The plastics industry in India is expected to grow to approxi-mately $30 billion by 2015, becoming the third largest consumer of polymers in the world behind only the United States and China. The current value of India’s plastics industry is nearly $25 billion, with annual consumption of 12.5 metric tons compared to 39 million and 37.5 million metric tons consumed by the U.S. and China, respectively. According to a recent report by London-based Catalyst Corporate Finance, India already has one of the fastest growing plastics markets with annual growth of almost 14%, but its per capita consumption rate of only 5kg compared to the world average of 26kg suggests the market still holds plenty of growth potential. Additionally, as the rupee-dollar exchange rate stabilizes, Catalyst expects M&A activity in India to pick up significantly during 2012 and beyond.
Select Transactions in Plastics & Packaging Page 3
Plastics & Packaging Equity Valuation Page 4
Plastics & Packaging Transaction Statistics Page 5
plastics.pmcf.com
JOHN [email protected]
MATT [email protected]
RYAN [email protected]
Sources: Associated Press, Plastics News, Company Reports, Wohlers Associates, Catalyst Corporate Finance
John HartCo-Lead Plastics and Packaging
Matt JamisonCo-Lead Plastics and Packaging
About P&M Corporate Finance
P&M Corporate Finance (“PMCF”) is an investment banking firm, focused exclusively on mid-dle market transactions, with professionals in Chicago, Detroit, and across the globe through Corporate Finance International affiliates. Our dedicated Plastics & Packaging Group has extensive industry knowledge and covers a wide range of processes including thermoform-ing, extrusion, blow molding, injection molding, resin, and color & compounding. Offering a breadth of advisory services, the Plastics & 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
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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.
Plastics & Packaging Monitor – May 2012
plastics.pmcf.com
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Select Transactions in Plastics & Packaging
Featured Transaction – Strategic ConsolidationMarch 21, 2012 — Dart Container Corporation, a pri-vately-held manufacturer of single-use plastic products for foodservice and consumer markets based in Mason, MI, agreed to acquire Solo Cup Company for $958 mil-lion, or 0.6x revenue and 9.0x EBITDA. Solo, founded in 1911 in Lake Forest, IL, manufactures thermoformed single-use products for food and beverage applications. Its products include cups, plates, bowls, take-out con-tainers, and cutlery. Prior to the transaction, Solo was the second largest thermoformer in North America with estimated thermo-forming sales of $789 million while Dart Container was the third largest. The combined company will remain the second largest thermoformer in North America, trailing only Lake Forest, IL-based Pactiv Foodservice.
Featured Transaction – Marquee DealApril 12, 2012 — P&M Corporate Finance is pleased to announce that it served as exclusive financial advisor to Altuglas International, a subsidiary of publicly traded Arkema S.A. (AKE.PA), in the corporate divestiture of its North American polycarbonate sheet business. The business, marketed under the brand name Tuffak, was acquired by Bayer MaterialScience, a subsidiary of pub-licly traded Bayer AG (BAY:GR). Terms of the transac-tion were not disclosed.The acquisition will include Arkema’s Tuffak® line of polycarbonate sheet products and is expected to strengthen Bayer MaterialScience’s leadership posi-tion in the North American polycarbonate sheet market. Bayer MaterialScience is among the world’s largest poly-mer companies and offers a broad range of Makrolon® branded polycarbonate sheet products for a variety of areas, including architectural, security, transportation, industrial, sign, and recreational.
Date Buyer Target Industry/ Application
Enterprise Value ($mm) EV/EBITDA
Blow Molding
Resin, Color and Compounding
Film
Injection Molding
Sheet and Thermoforming
Specialty Processes
21-Feb-12 Guala Closures SpA Anthony Smith Australasia Pty Food & Beverage - -24-Feb-12 Rieke Corporation Arminak & Associates Inc Consumer 64.0 -27-Feb-12 3i Group PLC Geka GmbH Consumer 160.0 -
2-Apr-12 Gerresheimer AG Neutral Glass & Allied Industries Pvt., Ltd. Medical - -2-Apr-12 Molded Rubber & Plastic Corporation ETI Incorporated Industrial - -4-Apr-12 MedPlast, Inc. United Plastics Group, Inc. Industrial - -
11-Apr-12 Nolato AB Cope Allman Jaycare Limited Medical 26.4 -19-Apr-12 D&W Fine Pack, LLC Jet Plastica Industries, Inc. Food & Beverage - -
16-Feb-12 MAUSER AG Varicon, LLC Industrial - -22-Feb-12 Beacon Trading (UK) Limited Beverage Plastics (Holdings) Limited Food & Beverage - -8-Mar-12 Ring Container Tech Inc BWAY Corp-Plastic Bottle Bus Industrial - -9-Mar-12 ALPHA Packaging, Inc. Vanga Products (Plastics) Inc. Consumer - -
30-Apr-12 Blowtech GT AS Gera Technology Automotive - -
1-Mar-12 Huntsman Gay Global Capital Citadel Plastics Holdings Inc Industrial - -3-Mar-12 RTP Deutschland GmbH Clariant-Conductive Bus Industrial - -5-Mar-12 Indorama Ventures Public Company Limited (SET:IVL) PT Polypet Karya Persada, PET Resin Assets Industrial - -2-Apr-12 Cytec Industries, Inc. Star Orechem International Private Limited Industrial 37.0 -
30-Apr-12 Arsenal Capital Partners Chromaflo Technologies LLC Industrial - -
14-Feb-12 Dentressangle Initiatives SAS Chemica S.A.R.L. Industrial 31.5 -7-Mar-12 Amcor Ltd. (ASX:AMC) Aperio Group Pty Limited Food & Beverage 251.6 6.0x
15-Mar-12 Alusa S.A. Empaques Flexa SA Food & Beverage 35.0 -21-Mar-12 Pinova Capital CLARUS Films GmbH Food & Beverage - -21-Mar-12 Amcor Ltd Uniglobe Packaging Pvt Ltd Consumer 20.7 -30-Mar-12 Navis Capital Partners Adampak Ltd. (SGX:5EZ) Medical 70.7 7.0x30-Mar-12 Nicolet Capital Partners LLC InterFlex Group Inc Food & Beverage - -
5-Apr-12 Teghleef Industries, LLC Applied Extrusion Technologies, Inc. Industrial - -12-Apr-12 Cytek UK Holdings UMECO plc (LSE:UMC) Transportation 408.2 12.5x18-Apr-12 Pro-Pac Packaging, Ltd. TWM Group of Companies Pty Ltd Industrial - -
21-Mar-12 Dart Container Corp Solo Cup Co Consumer 958.1 9.0x4-Apr-12 Pro-Pac Packaging, Ltd. Gallego Pty Ltd Food & Beverage - -9-Apr-12 Anchor Packaging, Inc. Mount Vernon, KY Thermoforming Facilities and Equipment Food & Beverage - -
12-Apr-12 J Mindal Ltd. BRM Packaging Limited Medical - -12-Apr-12 Bayer MaterialScience, LLC Arkema, Inc., Polycarbonate Sheet Business Industrial - -
3-Feb-12 National Oilwell Varco Inc NKT Flexibles I/S Industrial 672.1 12.6x15-Feb-12 Wienerberger AG Pipelife International GmbH Industrial 211.5 3.7x5-Mar-12 Park-Ohio Industries Inc. YH America South Carolina LLC Automotive 97.5 -
12-Mar-12 Advanced Drainage Systems Inc Quality Culvert-Pipe Mnfg Asts Construction - -13-Apr-12 PFB Corporation Knauf USA Polystyrene, Inc., Polystyrene Molding Plant Construction - -13-Apr-12 Dura-Line Holdings Inc PolyPipe Holdings Inc Industrial - -
Sources: Capital IQ, Plastics News, Company Reports, Associated Press
Plastics & Packaging Monitor – May 2012
P&M Corporate Finance, LLC
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Plastics & Packaging Equity Valuation
Income Statement data as of last period date reported
Currency conversion rate as of 6/1/2012
Source: Capital IQ ^Based on available Capital IQ Analyst summaries*Excludes Trex Co. Inc.
Performance of PMCF Indices vs. S&P 500 PMCF Key Takeaways and Analysis
• All components of the PMCF Index are trading relatively flat during April 2012 with EV/EBITDA multiples compa-rable to March 2012 levels.
• EV/EBITDA multiples and PMCF components remained flat through April 2012 with large packaging experienc-ing a slight increase and diversified companies declining slightly.
• Only the Diversified and Large Packaging components of the PMCF Index experienced positive gains during April 2012, as other components, as well as the S&P 500, de-clined slightly during the month.
• The Color & Compounding and Diversified components continue to trade at the highest levels of the PMCF Index increasing approximately 30% and 34% since the begin-ning of 2012, respectively.
Apr-09Apr-12
Jul-09Oct-0
9Jan-10
Apr-10Jul-10
Oct-10
Jan-11Apr-11
Jul-11Oct-1
1Jan-12
S&P 500 Large Mid C&C Diversified
0%
50%
100%
150%
200%
250%
300%
350%
400%
$
Company Name Symbol LTMRevenue
LTMEBITDA
Market Cap
Price/Earnings Current 3 Year
AverageProjected Next FYE*
Large Packaging (Large)
Large Average
Mid-Size Packaging (Mid)
Mid-Size Average
Color and Compounders (C&C)
C&C Average
Diversified and Industrial Plastics (Diversified)
Diversified Average
EV / EBITDA Multiples
$
$ $
$ $
$ $
$
$
$
$
Financials / Metrics ($USD) (4/30/2012)
$
$
$
$
$ Amcor Ltd. ASX:AMC 11,948 $ 1,161 $ 8,799 $ 27.85 10.2x 9.9x 7.6xAptarGroup, Inc. NYSE:ATR 2,353 421 3,625 20.57 8.8x 7.8x 8.0xAvery Dennison Corp. NYSE:AVY 5,983 603 3,369 20.77 7.5x 7.9x 7.6xBemis Co. Inc. NYSE:BMS 5,303 622 3,339 19.30 7.7x 7.4x 7.4xRexam plc LSE:REX 7,281 1,115 5,785 12.46 7.1x 6.1x NASealed Air Corp. NYSE:SEE 6,430 849 3,721 23.98 10.4x 6.8x 7.0xSilgan Holdings Inc. NasdaqGS:SLGN 3,575 513 3,063 15.39 8.4x 6.7x 8.0xSonoco Products Co. NYSE:SON 4,594 561 3,331 16.65 7.7x 7.1x 7.0x
5,933 730 4,379 19.62 8.5x 7.5x 7.5x
$ $ AEP Industries Inc. NasdaqGS:AEPI 1,025 49 192 17.23 8.9x 7.9x NA CCL Industries, Inc. TSX:CCL.B 1,250 235 1,224 15.15 6.2x 5.4x 5.9x
Multi-Color Corp. NasdaqGS:LABL 510 82 345 15.75 10.7x 8.1x 7.2xRPC Group plc LSE:RPC 1,575 158 938 14.53 7.9x 6.4x NA
Tredegar Corp. NYSE:TG 823 97 554 19.07 6.7x 5.9x 4.5x Winpak, Ltd. TSX:WPK 675 128 958 15.05 6.9x 6.2x 6.3x
976 125 702 16.13 7.9x 6.6x 6.0x
$ $ $ A. Schulman, Inc. NasdaqGS:SHLM 2,202 125 726 15.66 7.0x 7.1x 6.3x Clariant AG SWX:CLN 7,814 875 3,360 14.59 5.4x 5.3x NA Cytec Industries, Inc. NYSE:CYT 3,090 462 2,923 17.12 6.8x 6.1x 6.0x
Ferro Corp. NYSE:FOE 2,049 153 448 48.46 5.0x 6.8x 5.2x PolyOne Corp. NYSE:POL 2,926 158 1,234 7.57 5.8x 5.1x 6.2x
3,616 354 1,738 20.68 6.0x 6.1x 5.9x
$ $ $ Filtrona plc. LSE:FLTR 832 164 1,498 24.06 10.6x 8.0x NA Georgia Gulf Corporation NYSE:GGC 3,295 252 1,214 21.37 7.3x 9.5x 6.0x
Intertape Polymer Group, Inc. TSX:ITP 793 72 305 35.08 7.9x 8.0x NA Jarden Corp. NYSE:JAH 6,692 787 3,204 16.63 7.8x 7.3x 7.4x
Myers Industries, Inc. NYSE:MYE 759 79 554 20.45 8.0x 4.2x 6.9x Plastic Omnium SA ENXTPA:POM 5,213 501 1,172 5.99 4.0x NA NA Simona AG DB:SIM 381 40 256 12.80 4.9x 6.3x NA Spartech Corp. NYSE:SEH 1,149 55 150 NA 5.8x 7.2x NA Trex Co. Inc. NYSE:TREX 294 30 494 NA 28.3x 13.2x 9.0x
2,156 220 983 19.48 7.0x* 7.2x* 6.8x*
Plastics & Packaging Monitor – May 2012
plastics.pmcf.com
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Feb 11 Mar 11 Apr 11 Feb 12 Mar 12 Apr 12May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12
1,011Strategic Financial Add-on Financial Platform
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24
1719 18
1418 16 17
19 1520 19 20
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Plastics & Packaging Transaction Statistics
Plastics & Packaging Transactions (Feb ‘11 – Apr ‘12)Transactions by End Market
PMCF Key Takeaways and AnalysisTransaction volume for the Plastics and Packaging indus-try from February 2012 through April 2012 was charac-terized by the following trends:
• Monthly deal activity in April 2012 continued at a pace consistent with Q1 2012 with deal totals matching those experienced in February and March
• Transaction volume during February 2012 through April 2012 declined approximately 7% versus the comparable period in the previous year as M&A activity has leveled off from record numbers experienced in late 2010 and early 2011
• Transaction mix remained consistent with the compa-rable period as financial buyers accounted for approxi-mately 37% of total deals from February through April in both 2011 and 2012
• Packaging deals, while experiencing a slight decline dur-ing the comparison period, accounted for 38% of total deal volume from February 2012 through April 2012, an approximate 2% increase in activity versus the same period twelve months earlier
• Overall transaction mix among plastic processes re-mained consistent during the comparison period, with blow molding and injection molding deals accounting for a greater share of overall activity while film and resin deals experienced the largest declines
• Distressed deals continued to display low levels of activ-ity, declining as a percentage of total activity to 1% in February 2012 through April 2012
Source: P&M Corporate Finance Company Reports
Transactions by Process Type
Packaging Transaction Detail
Distressed Transaction Detail
Feb ’11 – Apr ‘11 Feb ’12 – Apr ‘12
% of Total
Dec–Jan 09–10
% of Total
Packaging DetailFeb ‘11–Apr ’11
Feb ‘12–Apr ’12
% of Pack
% of Pack
Rigid Packaging 15 41.7% 15 42.9%
Flexible Packaging 20 55.5% 15 42.9%
Bottles 1 2.8% 5 14.2%
Total 36 100% 35 100%
% of Total
% of Total
Distressed 3 3.0% 1 1.1%
Feb ‘11–Apr ’11
Feb ‘12–Apr ’12
Blow Molding,3%
Injection Molding,
25%
Film, 25%
Resin / Color &Compounding,
20%
Sheet & Thermoforming,
9%
Specialty, 18%
Blow Molding,9%
Injection Molding,
33%
Film,
19%
Resin / Color &Compounding,
9%
Sheet & Thermoforming,
8%
Specialty, 22%
Food & Beverage
Industrial
Consumer
Construction
Medical
Automotive
Transportation
Electronics
Total
End MarketFeb ‘11–Apr ’11
Feb ‘12–Apr ’12
% of Total
% of Total
13 13.0% 15 16.1%
35 35.0% 42 45.2%
18 18.2% 12 12.9%15 15.0% 8 8.6%7 7.0% 8 8.6%
9 9.0% 4 4.3%
0 0.0% 1 1.1%3 3.0% 3 3.2%
100 100% 93 100%
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TRANSACTION UPDATE PLASTICS & PACKAGING
FOR MORE INFORMATION, VISIT WWW.PMCF.COM
Hillenbrand, the world’s leading manufacturer of caskets and other death care products, announced that it is acquiring publicly traded K-Tron International, a leading manufacturer of material handling equipment and systems for plastics and other industries, for approximately $450M in an all cash merger.
PMCF has been supporting HI in its acquisition program since June 2009 and served as its exclusive advisor in connection with this important transaction. P&M Corporate Finance helped HI to develop its acquisition strategy, assisted it in its search for candidates, participated in negotiations relating to the merger, and issued a Fairness Opinion to HI's board of directors. The transaction is scheduled to close in early April 2010.
HILLENBRAND, INC. (NYSE: HI) ANNOUNCES $450M ACQUISITION
has sold itswheels business to
HAMILTONROBINSONCAPITALPARTNERS
The undersigned has been formally engaged to serve as exclusive financial advisor
TRANSACTION UPDATE PLASTICS & PACKAGING
FOR MORE INFORMATION, VISIT WWW.PMCF.COM
P&M Corporate Finance (PMCF) is pleased to announce that it served as exclusive financial advisor to Hancock Park Associates, a Los Angeles based private equity group with additional offices in Houston, in its successful sale of Houston-based Drilltec to private equity investors Lubar & Co. (Lubar) and Pouschine Cook Capital Management (Pouschine Cook). Hancock Park acquired Drilltec in May 2007 and facilitated significant growth of the business during its investment period. For the past 30 years Drilltec has been the industry leader in innovating, engineering, and manufacturing critical protection packaging products for the oil country tubular goods (OCTG) market.
Hancock Park and Drilltec selected PMCF’s Plastics & Packaging Group, led by John Hart, to conduct an international sale process for the Company. The mandate was to identify a partner to support the Company’s growth into new geographies, continued investment in new product development, and expansion into new market segments. The transaction successfully closed March 16, 2012.
PMCF COMPLETES SALE OF INDUSTRIAL PROTECTIVE PACKAGING LEADER
JOHN D. [email protected]
MATTHEW G. [email protected]
RYAN R. [email protected]
WILLIAM L. BLAKE [email protected]
DANIEL M. [email protected]
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