global consolidation among plastics processors: lead, follow, or get out of the way september 10,...
TRANSCRIPT
Global Consolidation Among Plastics Global Consolidation Among Plastics Processors: Processors:
Lead, Follow, or Get Out of the WayLead, Follow, or Get Out of the Way
September 10, 2013Norwalk, California
www.blaige.com
WPA Mergers & Acquisition WPA Mergers & Acquisition ConferenceConference
Blaige & Company’s Pure Focus has resulted in its position as the brand leader and only specialist investment bank of its kind.
Our advantage is rooted in two unique and significant capabilities: Application of Extensive CEO - Level Strategy and Operations
Experience Plastics, Packaging, Chemicals Only.
Pure Focus. Premier Value.Pure Focus. Premier Value.SMSM
Blaige & Company’s senior advisory professionals have personally managed, owned, or visited over 600 plastic, packaging, and chemical operations in over 40 countries, and have completed nearly 200 value-enhancing transactions exclusively in plastics, packaging, and chemicals.
Blaige & CompanyBlaige & Company
© Copyright 2013 All Contents Blaige & Company 2
Global Operating Experience, Exclusive Focus, Unmatched Global Operating Experience, Exclusive Focus, Unmatched
ResultsResults
has acquired
Exclusive representation of P & O Packaging, Ltd.
by Blaige& Company L.L.C.
P & O Packaging, Ltd.a portfolio company of PinecrestCapital Inc.
© Copyright 2013 All Contents Blaige & Company 3
Blaige & CompanyBlaige & Company
AgenAgendada
Mega Trends in Plastics M&A
I.Globalization Driving Growth
II.Segment Analysis: Key End Market (Packaging) Supply Chain (Machinery/Materials) Processors (5 Segments)
III.Big Getting Bigger, Widening “Gap”
IV.Sellers’ Market-Quality/Size Matter
V.Lead, Follow, or Get Out of the Way
(Strategy)
VI.Recommendation to Plastics Processors &
Conclusion © Copyright 2013 All Contents Blaige & Company 4
I. Globalization Driving I. Globalization Driving GrowthGrowth
5
Plastics Deal Volume Way Up in Past Twelve Years: Plastics M&A Volume Doubled from 2001-2013F
I. Globalization Driving Growth
Source: Blaige & Co. Proprietary Research
© Copyright 2013 All Contents Blaige & Company 6
96 107148 172 203 223 201
274 248 259212 222 204
71 50
125115
126138
140
103 140159
162 169155
48 41
96 72
8864 85
7092
118
94 7771
215198
369 359
417 425 426447
480
536
468 468430
0
100
200
300
400
500
600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Industrial Packaging Raw Materials
Average = 403deals
Plastics Deal Volume Way Up in Past Twelve Years: Plastics M&A Volume Doubled from 2001-2013F
I. Globalization Driving Growth
Fastest Growth: International (BRIC Geographies)
© Copyright 2013 All Contents Blaige & Company 7
International/International
40%
U.S./International
28%
US Only32% International/
International45%
U.S./International
21%
US Only34%
2001 2013F
215 Transactions 430 Transactions
Source: Blaige & Co. Proprietary Research
I. Globalization Driving Growth
Strategic Motivations: 84% of Deals are Strategic in Nature (Strategic Buyers & Financial Add-ons)
© Copyright 2013 All Contents Blaige & Company 8
Strategic Buyers85%
FinancialPlatform
10%
Financial Add-On
5%
Strategic Buyers69%
FinancialPlatform
16%
Financial Add-On
15%
2001 2013F
215 Transactions 430 Transactions
Plastics Deal Volume Way Up in Past Twelve Years: Plastics M&A Volume Doubled from 2001-2013F Fastest Growth: International (BRIC Geographies)
Source: Blaige & Co. Proprietary Research
9
I. Globalization Driving Growth
© Copyright 2013 All Contents Blaige & CompanySource: Blaige & Co. Proprietary Research -- Plastics News January 25, 2013
Strategic Consolidation Changing Competitive Landscape
II. Segment Analysis
10
Plastic Packaging
Deal Activity
Key Trends 2013 Packaging has been a bright spot of M&A activity in recent years Packaging represents 36% of overall plastics M&A activity in 2013 Flexible/Rigid packaging both very attractive niches
II. Segment Analysis – Key End Market (Packaging)
© Copyright 2013 All Contents Blaige & Company 11
1731
66 74 74 6653 43
6279
67 63 5811
19
59 4152 72
87
60
78
80 95 10698
28
50
125115
126138 140
103
140
159 162169
155
0
20
40
60
80
100
120
140
160
180
200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Flexible Rigid
Average = 124deals
Source: Blaige & Co. Proprietary Research
Machinery & Tooling Deal Activity
Headline DealsCCMP Capital Advisors/Milacron (Avenue Capital Group)Milacron/Mold-Masters (3i Group) - $968mmBerkshire Partners and OMERS/Husky (Onex) - $2.1bOnex/KraussMaffei (Madison Capital Partners) - $732mmOnex/Davis-Standard (Hamilton Robinson) - $189mm
II. Segment Analysis - Supply Chain (Machinery)
© Copyright 2013 All Contents Blaige & Company 12
9
17 17
27
3230
49
30 30
3633
0
10
20
30
40
50
60
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Average = 28deals
Source: Blaige & Co. Proprietary Research
Resins, Colorants & Compounding Deal Activity
Headline DealsClariant/Sud Chemie - $2.6bSK Capital/Clariant AG’s non-core operations - $550mmPolyOne/ColorMatrix (Audax) - $486mmMexichem/PolyOne Corp.'s PVC resin assets - $250mmA. Schulman/Network Polymers - $50mm
II. Segment Analysis - Supply Chain (Materials)
© Copyright 2013 All Contents Blaige & Company 13
4841
96
72
88
64
85
70
93
84
94
8275
0
20
40
60
80
100
120
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Average = 76deals
Source: Blaige & Co. Proprietary Research
Film & SheetDeal Activity
Headline DealsBerry IPO in 2012 - $5b; acquired in 2006 for $2.25b (Apollo and Graham Partners)Constantia Flexibles [Prospective IPO] (One Equity Partners)/Global Packaging Corp.; Spear Group; Parikh Packaging (minority stake)Sun Capital combined Kobusch Group, Britton Group, Paragon Print & Packaging Group, PACCOR, and InteliCoat to form Exopack Holdings Sarl [Prospective IPO] (>2.5b sales)
II. Segment Analysis - Processors
© Copyright 2013 All Contents Blaige & Company 14
12 9 12 12 1623
17
31 3321 23 21 21
33
22
5462 58 43
41
45
5970
60 635645
31
66
74 74
66
58
76
92 91
83 84
77
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Industrial Packaging
Average = 71deals
Source: Blaige & Co. Proprietary Research
15
Film & SheetDeal ActivityContinued
II. Segment Analysis - Processors
12 9 12 12 1623
17
31 3321 23 21 21
33
22
5462 58 43
41
45
5970
60 635645
31
66
74 74
66
58
76
92 91
83 84
77
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Industrial Packaging
Average = 71deals
Headline DealsMondi/Nordenia (Oaktree) - $781mmWind Point/Hilex Poly (TPG); ArgotecHilex Poly (Wind Point)/Clondalkin - $98.4mmInteplast/Nina Plastics; Vifan; Salerno Plastics Films; Pitt Plastics; P&O Packaging; Trinity Packaging; Minigrip (ITW)
© Copyright 2013 All Contents Blaige & Company Source: Blaige & Co. Proprietary Research
Headline DealsPlatinum Equity/BWAY (Madison Dearborn) - $1.2bBWAY/Ropak Packaging (Linpac Group) - $265mmOdyssey/Pexco (Sawmill) - $247.5mmPexco (Odyssey)/Spectrum Plastics (Spell); Scandia PlasticsSilgan Holdings/Portola Packaging (Wayzata) - $266mmJabil Circuit/Nypro - $665mmFlextronics/RIWISA AG
II. Segment Analysis - ProcessorsInjection
MoldingDeal Activity
© Copyright 2013 All Contents Blaige & Company 16
12 9 12 12 1623
17
31 3321 23 21 21
33
22
5462 58 43
41
45
5970
60 635645
31
66
74 74
66
58
76
92 91
83 84
77
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Industrial Packaging
Average = 71deals
Source: Blaige & Co. Proprietary Research
Blow MoldingDeal Activity
Headline DealsRank-Reynolds/Graham Packaging - $4.5bBain Capital/CCC (Vestar) - $775mm; Madras Packaging; Roffe ContainerGraham Partners/Scandia PlasticsGS Capital/Plastipak Packaging (minority stake)
II. Segment Analysis - Processors
© Copyright 2013 All Contents Blaige & Company 17
8 8
24
10
21
2423
15
11
26
14
2826
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Average = 18 deals
Source: Blaige & Co. Proprietary Research
Thermoforming Deal Activity
Headline DealsDart Container/Solo Cup (Vestar) - $1bOne Equity Partners/minority stake in Grupo PhoenixSonoco/Tegrant (Metalmark) - $550mmPenda Corp. (Resilience and Littlejohn & Co.)/Fabri-FormOlympus/Waddington North America (Seven Mile Capital Partners)Waddington North America (Olympus)/Par-PakWembly Enterprises/Universal Plastics
II. Segment Analysis - Processors
© Copyright 2013 All Contents Blaige & Company 18
64 3 3
53 3
9 85
2
11 10
3
2
16
82
12
7
6 812
6
1413
9
6
19
11
7
15
10
1516
17
8
2523
0
5
10
15
20
25
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Industrial Packaging
Average = 14deals
Source: Blaige & Co. Proprietary Research
Pipe, Profile & Tube
ExtrusionDeal Activity
Headline DealsPly Gem Industries (Post-IPO)/Mitten, Inc. (Graham Partners) - $79.3mmCHS Capital/Dura-Line (Audax); Polypipe (Halifax Group)Westlake Chemical Corp./CertainTeed’s PVC pipe business (Saint-Gobain) - $175mmAdvanced Drainage Systems (American Securities)/Quality Culvert; Intel & Pipe ProtectionInfiltrator Systems (Graham Partners)/Advanced Drainage Systems’ septic chamber assets
II. Segment Analysis – Processors
© Copyright 2013 All Contents Blaige & Company 19
22 20
41
5148
6559
83
63
7470 69
63
0
10
20
30
40
50
60
70
80
90
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
Average = 56deals
Source: Blaige & Co. Proprietary Research
III. Big Getting Bigger, Widening the “Gap”
20
Summary: 58% of 2001’s Top 50 Plastics Processors have Sold / Merged in Past Twelve Years; Consolidation Active Across All Segments
41% Eliminated; 17% Changed Ownership; 58% Merged/Sold
III. Big Getting Bigger, Widening the “Gap”
Sector Eliminated Sold TotalBlow Molding 48% 22% 70%Injection Molding 56% 12% 68%Pipe, Profile & Tubing 36% 26% 62%Film & Sheet 44% 18% 62%Thermoforming 44% 10% 54%Labels 40% 12% 52%Adhesives & Sealants 18% 18% 36%Average 41% 17% 58%
Consolidation of 2001's Top 50 Companies
© Copyright 2013 All Contents Blaige & Company 21Source: Blaige & Co. Proprietary Research
Packaging Industry Global ConsolidationEvolution across packaging types show that Flexible Packaging is due for Significant Consolidation
III. Big Getting Bigger, Widening the “Gap”
Source: Industry Research© Copyright 2013 All Contents Blaige & Company 22
Segment 1980 2012
Glass Bottles 19 competitors 3 Leaders: 90% share (Anchor, Owens, St. Gobain)
Food Cans 25 competitors 3 Leaders: 80% share(Ball, Crown, Silgan)
Beverage Cans 14 competitors 3 Leaders: 80% share (Ball, Crown, Rexam)
Folding Carton Packaging (N.A. Market)
Many competitors 5 Leaders: 74% share (Graphic Packaging, MeadWestvaco, Rock-Tenn, International Paper, Cascades)
Flexible (Plastic) Packaging
Many competitors 4 Leaders: 35% share (Amcor, Bemis, Printpack, Sealed Air)
Fiber Packaging
621 Transactions 27% of Packaging
transactions
Corrugated24%
Integrated Paper Making
14%
Diversified17%
Label22%
Folding Carton23%
Plastic Packaging Metal and Glass Packaging
69 Transactions 3% of Packaging
transactions
1,610 Transactions 70% of Packaging
transactions
M&A Activity in the Global Packaging Markets 2001-2013F 2,300 Packaging Transactions Analyzed by Blaige & Company
Glass 33%
Metal 67%
III. Big Getting Bigger, Widening the “Gap”
© Copyright 2013 All Contents Blaige & Company 23Source: Blaige & Co. Proprietary Research
1975 GOODYEAR OWNERSHIP
1976 ROHM&HAAS KODAK MANAGEMENT
1977 STYLE
1978 LARGE
1979 FIBER
1980 PUBLIC
19811982198319841985 ICI RAW
1986 MATERIALS
19871988 TECHNOILOGY
1989199019911992 SHELL
1993 WELLMAN
1994 EASTMAN NAN YA ASIAN
1995199619971998 DUPONT
1999 TIEPET PRIVATE
2000 M&G FOREIGN
2001 DAK VORIDIAN
2002 (ALFA) LARGE SCALE
2003 STARPET
20042005 ENTREPRENEURIAL
2006 EASTMAN
2007 PTA FOCUS
2008 MTR Technology
2009 INDORAMA
2010 SELENIS RATIONALIZATION
2011 CONSOLIDATION
201220132014
INDORAMA VENTURES
NAFTA PET RESIN PRODUCER INDUSTRY STRUCTURE & TRENDS
CELANESE
HOECHST
KOSA
KOCH IND
INVISTA
III. Big Getting Bigger, Widening the “Gap”
Source: John Maddox/The Packaging Conference
The Field of PET Resin Supplies Has Decreased From Over 23 to 5 in the The Field of PET Resin Supplies Has Decreased From Over 23 to 5 in the Past Three DecadesPast Three Decades
© Copyright 2013 All Contents Blaige & Company 24
Leaders: 58% of 2001’s Top 50 U.S. Companies Have Merged or Sold; Consolidation Active Across All Segments
Small Fighting Harder: 78% of Plastics Processors Have Sales of Under $50 Million, While Approximately 84% Have Sales Under $100 Million
III. Big Getting Bigger, Widening the “Gap”
© Copyright 2013 All Contents Blaige & Company 25
Small (Sales < $50M)78%
Mid (Sales $50M -$100M)
6%
Large (Sales
$100M -$500M)
13%Mega (Sales > $500M)
3%
Source: Blaige & Co. Proprietary Research
Access to CapitalAccess to Capital: : Provides a Size Advantage (3.4 Provides a Size Advantage (3.4 times Larger)times Larger)
Consolidation Survivors – Benefit of Capital Access (millions)
III. Big Getting Bigger, Widening the “Gap”
© Copyright 2013 All Contents Blaige & Company 26
$147
$505
0
100
200
300
400
500
600
Limited Access to Capital Greater Access to Capital
Source: Blaige & Co. Proprietary Research
Top Consolidators (“Leaders”)
Static Participants(“Others”)
Consolidatees(“Followers”)
• 10-20% of universe• Rapidly gaining
share• Aggressive
acquisitions and divestitures
• Market domination via best acquisitions, selective divestitures
• 60-80% of universe• Share erosion• Mergers and selective
acquisitions• Pursue niche
leadership
• 10-20% of universe• Rapidly losing share• Restructuring and
divestitures • Sell at maximum
Price
Hierarchy: Leaders, Followers & Others
III. Big Getting Bigger, Widening the “Gap”
© Copyright 2013 All Contents Blaige & Company 27
IV. Sellers’ Market - Quality/Size Matter
28
Capital Availability: Overhang shows tenfold increase Private Equity Overhang Private Equity Overhang
Source: Pitchbook Data, Inc.
IV. Sellers’ Market - Quality/Size IV. Sellers’ Market - Quality/Size MatterMatter
© Copyright 2013 All Contents Blaige & Company
5679
44
90
142
204
266 252
147
51
100 113
0
100
200
300
400
500
600
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F
($ m
illio
ns)
Capital Overhang Capital Raised
$432 billion
29
Sellers’ Market: Valuation multiples are back to near record levels, Valuation multiples average: 7.8x EBITDA
Source: Pitchbook (Large Deal Universe)
Private Equity Buyout Purchase Price Multiples (Deal Private Equity Buyout Purchase Price Multiples (Deal Size/EBITDA)Size/EBITDA)
IV. Sellers’ Market - Quality/Size IV. Sellers’ Market - Quality/Size MatterMatter
© Copyright 2013 All Contents Blaige & Company
2.12.9 2.4
3.2 3.2
4.53.8 3.5 3.3
4.13.2
3.8
4.0 4.7
5.3 5.84.0 4.9
4.2 4.74.1
4.1
5.9
6.9 7.1
8.59.0
8.5 8.7
7.78.0 8.2
7.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Equity/ EBITDA Debt/ EBITDA EV/EBITDA
30Source: Blaige & Co. Proprietary Research
© Copyright 2013 All Contents Blaige & Company Source: Pitchbook
Private Equity Exits at Record Levels
31
““Smart Money” Locking in GainsSmart Money” Locking in Gains
IV. Sellers’ Market - Quality/Size IV. Sellers’ Market - Quality/Size MatterMatter
578
374
219
486524
626
700
0
100
200
300
400
500
600
700
800
2007 2008 2009 2010 2011 2012 2013F
Average = 501 deals/ year
Capital Availability: Shows tenfold increase Sellers’ Market: Valuation multiples are back to
near record levels Favorable Market Conditions: Corporate and
financial sellers have embraced market conditions; private sellers appear ready to “jump in” after 12 years of waiting
IV. Sellers’ Market - Quality/Size IV. Sellers’ Market - Quality/Size MatterMatter
© Copyright 2013 All Contents Blaige & Company 32
Private 60%
Corporate Divestitures
35%
Financial Divestitures
5%
Private47%
Corporate Divestitures
36%
Financial Divestitures
17%
2001 2013F
430 Transactions215 TransactionsSource: Blaige & Co. Proprietary Research
33
IV. Sellers’ Market - Quality/Size IV. Sellers’ Market - Quality/Size MatterMatter Potential Transaction Options
Blaige & Company’s experience with the wide variety (8-10) of partner types/deal structures, outlined below, will give you the broadest possibility and allow you to chose the structure that best achieves your goals.
Transaction StructureManagement Autonomy Case Study
1 MBO/ ESOP Very High Form House; Constantia Multifilm
2 Financial Partner (Platform) Very High Plastic Packaging Technologies
3 International Financial Partner (Platform) Very High P&O Packaging
4 Financial Partner (Complementary Add-on) High Floeter Flexibles
5 Strategic Partner (Joint Venture) High/ Medium ISO Poly Films
6 European Strategic Buyer Medium H.S. Crocker Pharmaceutical Carton Division
7 Financial Partner (Competitor Add-on) Medium/ Low Grayling Industries; Dot Packaging Group
8 Domestic Strategic Buyer Medium/ Low Shield Pack
9 Asian Strategic Buyer Low Speci-Gard Medical Packaging; Nina Plastics
© Copyright 2013 All Contents Blaige & Company Source: Blaige & Co. Proprietary Research
V. Lead, Follow or Get Out of the Way (Strategy)
34
Global Consolidation: expected to continue at an accelerated rate, further changing the competitive landscape
“Shocks to the System/Fragile M&A Cycle”: never before seen permanent game changers for succession planning Wars; Technology Bubble “September 11th, 2001” Global Financial Crisis; Credit Crunch Increasing Regulation/Taxes Multiple Hurricanes and Tsunamis Hyperinflation of Material Prices European Union Debt Crisis Foreign Competition (Antidumping Action Required)
CEO’s must develop and effectively execute Consolidation Plan/Strategies in order to survive and thrive in the future Lead (Acquire) Follow (Merge) Get Out of The Way (Sell, Divest, Recapitalize)
V. Lead, Follow, or Get Out of the Way V. Lead, Follow, or Get Out of the Way (Strategy)(Strategy)
© Copyright 2013 All Contents Blaige & Company 35
VI. Recommendations toPlastics Processors &
Conclusion
36
Plastic Processors Are Advised to Aspire to $100 Million or Greater Level (Top 16% of Universe per Blaige Study)
“Institutional Practices” Mandatory for Small/Mid-Size Players to Access Financing and M&A Markets
Timing and Preparation are Everything
Blaige is the Natural Partner for Your Success
Please Note: Blaige Twelve Year Plastics & Packaging M&A Consolidation Study (2001-2012) is Now Available for Purchase.
Thank You!
VI. Recommendations to Plastics Processors VI. Recommendations to Plastics Processors & Conclusion& Conclusion
© Copyright 2013 All Contents Blaige & Company 37
Contact InformationContact InformationThomas E. Blaige: Thomas E. Blaige: [email protected]
CHICAGOCHICAGO::
One Magnificent MileOne Magnificent Mile
980 North Michigan Avenue, Suite 980 North Michigan Avenue, Suite 10801080
Chicago, IL 60611Chicago, IL 60611
312-337-5200, Extension 201312-337-5200, Extension 201
MIAMIMIAMI::
Espirito Santo Bank PlazaEspirito Santo Bank Plaza
1395 Brickell Avenue, Suite 8001395 Brickell Avenue, Suite 800
Miami, FL 33131Miami, FL 33131
305-290-4650305-290-4650
© Copyright 2013 All Contents Blaige & Company 38
Global Consolidation Among Plastics Global Consolidation Among Plastics Processors: Processors:
Lead, Follow, or Get Out of the WayLead, Follow, or Get Out of the Way
September 10th, 2013Downey, California
www.blaige.com
WPA Mergers & Acquisition WPA Mergers & Acquisition ConferenceConference