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M&A Quarterly

For additional information or inquiries, please contact one of our team members:

www.pmcf.com

PlasTics & PackagiNg Third QuarTer 2013

John D. Hart248.223.3468 [email protected]

Matt G. [email protected]

Ryan R. Shuchman248.603.5372 [email protected]

James R. [email protected]

Daniel M. Ratliff [email protected]

Scott S. [email protected]

about PMcFP&M Corporate Finance (“PMCF”) is an investment banking firm, focused ex-clusively 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 cov-ers 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 • Sales and Divestitures• Capital Raising • Strategic Assessments• Fairness Opinions

cHicagO225 W. Washington Street, Suite 2700Chicago, IL 60606312.602.3600

dETROiT26300 Northwestern Highway, Suite 120Southfield, MI 48076248.223.3300

PMcF Transaction announcements

Packaging: Medical Recapitalization with Private Equity

ThermoformingCompany Sale for Family Shareholders

www.pmcf.com

M&A Quarterly – Plastics & Packaging

2

After a slow start to 2013, plastic and packaging M&A activity during the third quarter continued to exhibit positive momentum that was experienced during Q2, with increasing M&A volumes. Q2 and Q3 2013 reg-istered 83 and 86 deals, respectively, approaching the average quarterly deal volume of 88 transactions the market has experienced since 2011. Through Q3 2013, the total year to date activity is 236 transactions with the trailing four quarters of plastic and packaging M&A remaining robust at 339 transactions.

Q3 YTD activity is down year over year, primarily due to abnormally low Q1 volume. However, current trends of increasing deal activity among plastic and packag-ing processors reflect a healthy M&A environment and are likely to continue if general economic conditions re-main steady and support attractive valuations for sell-ers. Driving valuations are active strategic buyers, do-mestic and international, increasingly focused on M&A execution to grow and deploy cash reserves. Further, private equity buyers are seeking to take advantage of low interest rates and deploy funds which continue to exceed the available targets.

Key Q3 2013 plastics and packaging M&A trends include the following:

• Strategic organizations were very active and widened the gap versus financial acquirers as a percentage of overall buying activity

• Transactions involving thermoformers and resin suppliers each increased versus Q3 YTD 2012, while film and specialty processor deals experienced the largest year over year de-clines

• Industry transactions including flexible packaging, rigid packaging, and bottles, combined for approximately 34% of plastics and packaging deal volume through Q3 2013

• Industrial end markets continued to drive the highest share of M&A activity while trans-portation and electronics transactions posted the strongest growth versus Q3 YTD 2012

• Publicly traded plastic and packaging companies outperformed the S&P 500 during Q3 2013 as average EV/EBITDA trading multiples exceeded 8.0x for the third straight quarter

The M&A market for plastics & packaging during Q3 2013 featured a number of marquee transactions, including:

• SCR Bard, Inc.’s (NYSE:BCR) acquisition of silicone medical supplier Rochester Medical Corporation (NasdaqGM:ROCM) for $239 million, or 13.2x EBITDA, in September 2013

• Polymer Group, Inc.’s acquisition of nonwoven polymer films supplier Fiberweb plc (LSE:FWEB) for approximately $259 million, or 5.8x EBITDA, in August 2013

• Silgan Holding, Inc.’s (NasdaqGS:SLGN) acquisition of closures manufacturer Portola Packaging, Inc. for $266 million, or 1.3x revenue, in August 2013

• The Carlyle Group’s (NasdaqGS:CG) acquisition of blow molder and packaging group Ches-apeake Ltd. from Irving Place Capital for an undisclosed amount in July 2013

Increased levels of M&A activity during Q2 and Q3 2013 indicate robust buyer interest in M&A. This activity level bodes well for plastic and packaging M&A to potentially continue near its quarterly average for at least the next several quarters. Consolidation remains a key driver in strategic buyer rationale and aggressive private equity buyers continue to be very active in the industry. Given numerous buyers with high levels of interest, and a limited num-ber of interested sellers, it appears that seller’s market conditions are likely to continue.

Strategic Financial Add-On Financial Platform

180

43

57

280

158

38

40

236

212

55

73

340

266

60

67

393

219

56

72

347

235

68

80

383

0

50

100

150

200

250

300

400

350

20122009 2010 2011

Num

ber

of D

eals

Q3 YTD ’13Q3 YTD ’12

Q3 2013 Market summary & Outlook

Q3 YTd 2013

Q3 YTd 2012

Bottles

14%

Rigid Packaging15%

Resin14%

Custom Molding27%

Flexible Packaging

16%Industrial

2%Consumer

9%

Building Products

3%

Sector

Injection Molding

Blow Molding

Film

Resin/Color & Compounding

Sheet & Thermoforming

Specialty

Total

2011

201118

10675

563260

347

201230

11068

633280

383

Q3 YTD ‘12217753

462558

280

% of Total

8%29%18%

16%8%

21%

100%

136439

492843

236

% ofTotal

6%27%17%

21%12%18%

100%

‘12 – ’13Change

-8-13-14

33

-15

-44

%Change-38%-17%-26%

7%12%

-26%

-16%

Q3 YTD ‘13

Source: P&M Corporate Finance, Company Reports

Flexible

Rigid Packaging17%

Packaging14%

Industrial8%

Consumer3%

Products9%

Bottles3%

Resin21%

Custom Molding25%

Building

Flexible

Transactions by Product segment

Trends in M&a:

deals by End Market

M&A Quarterly – Third Quarter 2013

PMCF

3

global Plastic Packaging M&a

Trends in M&a:• Packaging M&A activity was slightly down through the first three quarters of 2013 as compared to the same period in 2012, driven

primarily by strong deal volume in H1 2012. Despite the overall year to date trend, Q3 2013 outperformed Q3 2012 packaging deals by two transactions

• Transaction mix among strategic and financial buyers shifted slightly in favor of strategic buyers, which remained the most active buyer segment and increased their share from 59% in 2012 to 65% in the first three quarters of 2013

• Medical packaging transactions experienced the strongest improvement in Q3 YTD 2013, versus the same period a year earlier, while there were also slight increases in food & beverage, transportation, and electronics markets

Transactions by Buyer Type Transactions by End Market

65

53

118

52

28

80

53

37

90

52

40

92

64

52

116

66

48

114

0

20

40

60

80

100

120

140

2009 2010 2011 2012

StrategicFinancial

Num

ber

of D

eals

Q3 YTD '12 Q3 YTD '13

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

35

26

23

-

6

-

-

-

90

36

19

11

-

11

-

2

1

80

Q3 YTD '12 Q3 YTD '13

industry News:

• August 2013 – Global demand for medical device packaging is projected to increase 5.9 percent annually to $25.7 billion in 2017, according to a new market study by Freedonia Group Inc. Gains are expected to be driven by expanding medical device packag-ing markets in India, Mexico, China, and emerging markets. These areas are experiencing diversification, expansion, and stricter regulation of medical product industries are raising the quality standards and functional requirements of containers and related accessories. Western Europe, the United States and Japan will continue to account for almost 60 percent of the total market; how-ever demand in these countries will expand more slowly than the average global pace as intensifying health care cost containment pressures and increased competition among suppliers will dampen growth.

• September 2013 – According to a new data report by Plastics News, the U.S. market for plastic caps and closures will post above-average sales increases through 2016 based on the increased use of plastic containers and the expanded use of plastic closures on other container types. Market growth will be supported by price increases in materials, increased use of value-added dispensing and child-protective closures, the growing popularity of single-serving containers and more plastic options in areas once domi-nated by other materials.

Featured sector Transactions August 2013 – Stamford, CT-based Silgan Holdings, Inc. (NasdaqGS:SLGN) announced its acquisition of Portola Packaging, Inc. for approximately $266 million, or 1.3x Portola’s estimated $200 million in sales. Portola Packaging, one of the largest manufacturers of tamper-evident plastic closures and containers for the dairy, juice, and food industries, is based in Naper-ville, IL and has eight plants across North America and Europe. Silgan views the acquisition as an opportunity to bolster the company’s relatively small European plastic closure presence via Portola’s manufacturing facilities in the United Kingdom and Czech Republic.September 2013 – Sussex IM, a contract manufacturer based in Sussex, WI, agreed to acquire the North American cosmetic compact business from Albea Group for an undisclosed amount. The business was previously a unit of Rexam plc, which was sold to Albea at the end of 2012. Sussex served as a contract manufacturer for Rexam first, and then Albea, before deciding the company wanted to take on the business for themselves and work directly with cosmetics companies. Sussex has approximately $70 million in annual sales, of which 15% is from cosmetic compacts, which the company believes will double as a result of the acquisition. Sussex has attributed its recent success to a commitment to innovation, creativity, and automation.

Public Acquirer31%

Private Acquirer28%

PE to PE7%

Private Equity (PE)34% Flexible

Public Acquirer41%

Private Acquirer 23%

PE to PE6%

Private Equity (PE)30%

# % PackagingRigidFlexibleBottling

Total

4133680

48%42%10%100%

4338990

51%41%8%100%

# % PackagingQ3 YTD '12 Q3 YTD '13

Q3 YTd 2012 Q3 YTd 2013

Buyer Type

Packaging Transaction detail

Sources: P&M Corporate Finance, Plastics News, Company Reports, Freedonia

www.pmcf.com


4

global injection Molding M&a

Trends in M&a:

• Transaction volume among plastic injection molders increased by 9 deals in Q3 2013 versus Q3 2012, a second consecutive quarter of increased activity after a lower volume in Q1 2013

• Transportation and electronics transactions experienced the strongest growth through Q3 YTD 2013, while industrial injection molding deals decreased most significantly

• Transactions involving strategic buyers increased as a percentage of overall deal volume, from 58% to 69%, however private equity buyers remained active in the space


industry News:

• July 2013 – Germany’s plastics industry accounts for more than a quarter of all injection molding in the European Union and is currently demonstrating “modest growth”, according to a report from Applied Market Information Ltd. Demand is being driven by increased exports, particularly in the automotive sector. Despite the Eurozone’s economic problems, Germany’s injection molding industry has grown, albeit at less than 1 percent per year on average, in 2007-2012. “Although not exactly a stellar performance, it has outperformed most other European markets,” notes the research group.

• August 2013 – Clariant Masterbatches’ specialty compounding group has developed a new nylon 66 compound that allows injec-tion molding to replace machined metal in lubricated products such as bushings and other applications. Such compounds con-taining molybdenum disulfide typically have been offered for machining of bar stock, but machining technology is costly due to long processing time and high scrap rates. Clariant claims its new product cuts scrap rates and reduces manufacturing time by 75 percent or more. For uses where extremely tight tolerances are required, parts can be injection molded and then machined to finished dimensions. The firm says its Renol 6642 contains 2 percent molybdenum disulfide to provide lubrication to complement the compound’s toughness and high compression strength.

Featured sector Transactions August 2013 – Flextronics International Ltd. (NasdaqGS:FLEX), a Singapore-based manufacturer of electronics for original equip-ment manufacturers in a variety of end markets, agreed to acquire RIWISA AG for an undisclosed amount. Based in Hägglingen, Switzerland, RIWISA is a family-owned medical plastics processing company with approximately 300 employees. Flextronics expects RIWISA’s precision plastics and automation capabilities will complement Flextronics Medical and will broaden its preci-sion injection molding offering. Flextronics, with annual sales of $23.6 billion, also has a main U.S. office in San Jose, CA. PMCF associated firm Helbling Business Advisors represented RIWISA.September 2013 – Pexco, LLC, an Alpharetta, GA-based plastics extruder and portfolio company of private equity groups Odys-sey Investment Partners and The Carlyle Group (NasdaqGS:CG), announced the acquisition of the Minneapolis-based operations of custom injection molder Spectrum Plastics Group from Spell Capital for an undisclosed amount. Spectrum manufactures custom injection molded components with approximately 50% of sales serving medical end markets. The acquisition, which di-versifies Pexco’s expertise into injection molding, marks the company’s second major deal of the year, having purchased Scandia Plastics in July.

2012

StrategicFinancial

67

39

106

58

52

110

45

32

77

44

20

64

43

44

87

70

36

106

010203040506070

90

110

80

100

20112009 2010 Q3 YTD ‘13Q3 YTD ‘12

Num

ber

of D

eals

120

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

6

11

12

2

12

8

3

10

64

6

29

11

1

15

10

-

5

77

Q3 YTD ‘12

Q3 YTD ‘13

Q3 YTd 2012 Q3 YTd 2013

Buyer Type

Flexible

Public Acquirer20%

Private Acquirer39%

PE to PE10%


Flexible

Public Acquirer27%

Private Acquirer42%


PE to PE3%

U.S.-to-U.S.

U.S.-to-Foreign

Foreign-to-U.S.

Foreign

Total

Distressed

32

6

6

33

77

1

24

4

3

33

64

2

Q3 YTD ‘12 Q3 YTD ‘13

sector deal statistics

Sources: P&M Corporate Finance, Plastics News, Company Reports, Applied Market Information


PMCF

5

global Film M&a

Trends in M&a:• Film extrusion M&A declined by 14 deals through Q3 YTD 2013 as compared to the same period a year earlier. Film remains an

active M&A space, but consolidation has decreased available targets• Transactions involving film extruders and converters that serve the food & beverage markets remained strong year over year, while

industrial and consumer deals experienced the largest declines• Although overall deal volume among film processors was down for the year to date period, transactions involving domestic buyers

increased from 11 to 16 deals while foreign buyers accounted for only 23 deals compared with 42 deals the previous year


industry News:• August 2013 – According to a report by Ceresana Research, the global market for plastic film will see demand reach 71 million

metric tons by 2020. The firm projects the market will grow at a compounded annual growth rate of 3.7 percent as demand for plastic films continues to rise. Growth will be driven by expanding applications for film products, increased global demand for convenience foods, and the advantages of plastic films in comparison to flexible packaging made from other materials (such as paper or aluminum foil). Ceresana says the market will also diversify over the same time frame. Films based on polyethylene — LDPE, LLDPE, HDPE — currently account for 73 percent of the market, but BOPP and PET films are growing in popularity because of their use in high-quality packaging.

• August 2013 – Bloomberg News reported global films producer Klockner Pentaplast Group is seeking a new buyer. Strategic Value Partners Investment Group — the Greenwich, Conn.-based firm that bought Klockner Pentaplast last year — is working with advisors Goldman Sachs Group Inc. and Jefferies Group LLC to find a buyer for the firm. Klockner Pentaplast is based in Mon-tabaur, Germany, and employs more than 3,000 at 17 plants worldwide. Klockner is a leading producer of films for pharmaceuti-cal, medical device, food, electronics and general-purpose thermoformed packaging. It also makes film for printing and specialty applications. In the year ended March 31, Klockner Pentaplast posted sales of almost $1.6 billion, up more than 2 percent vs. the prior year. Since 1997, Klockner Pentaplast has made 20 acquisitions, but financial challenges led to its credit rating being downgraded by credit rating agency Standard & Poor’s in 2011. That move led to SVP acquiring the firm last year for nearly $1.3 billion in debt and equity.

Featured sector Transactions September 2013 – Berry Plastics Group (NYSE:BERY) announced its acquisition of the flexible packaging and film business of Graphic Packaging Holding Co. (NYSE:GPK) for an undisclosed amount. The acquisition of the division, which has estimated sales of $100 million, includes manufacturing facilities in Iowa, Wisconsin, and Illinois. Graphic Packaging’s primary products in its flexible packaging division include wraps, films, pouches, and bags for the food, medical, industrial, and personal care markets. Berry be-lieves the acquisition will position the company to meet increasing demand for flexible packaging products across the markets Berry currently serves via its existing flexible packaging division.

August 2013 – Trinity Packaging Corporation, a Armonk, NY-based plastic film processor, agreed to sell its plastic bag and food-service business to Inteplast Group for an undisclosed amount. The transaction includes Trinity plants in Lewiston, PA and Pueblo, CO. Trinity’s owners, the Freund family, will continue to own and operate the company’s heavy duty and specialty films division. The acquisition is Inteplast’s third in 13 months, making Inteplast’s Integrated Bagging Systems division one of the leading manufactur-ers of plastic bags and food-service items for private label, retail, and grocery markets. Inteplast Group ranks fourth on Plastics News’ North American Film & Sheet rankings.

StrategicFinancial

48

27

75

35

18

53

28

11

39

45

23

68

35

27

62

51

27

78

0

10

20

30

40

50

60

70

80

2012 Q3 YTD ‘12 Q3 YTD ‘132009 2010 2011

Num

ber

of D

eals

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

16

21

10

1

4

1

-

-

53

16

13

6

-

2

-

1

1

39

Q3 YTD ‘12 Q3 YTD ‘13

Q3 YTd 2012 Q3 YTd 2013

Buyer Type

Flexible

Public Acquirer 34%


Private Equity(PE)26%

PE to PE8%

Flexible

Public Acquirer28%

Private Acquirer41%


PE to PE5%

U.S.-to-U.S.

U.S.-to-Foreign

Foreign-to-U.S.

Foreign

Total

Distressed

10

1

3

39

53

-

13

3

2

21

39

2

Q3 YTD ‘12 Q3 YTD ‘13


Sources: P&M Corporate Finance, Plastics News, Company Reports, Ceresana Research, Bloomberg News

www.pmcf.com


6

global Resin and color & compounding M&a

Trends in M&a:• M&A activity involving resin suppliers and color & compounders grew 7% during the first three quarters of 2013 compared to the

same period in 2012, highlighting the relative strength of the sector given the overall decline in plastics and packaging M&A volume• Transaction mix among financial and strategic buyers remained relatively consistent with the previous year as financial buyers

accounted for approximately 20-25% of M&A activity in each year• Deal flow involving domestic buyers increased by four deals through Q3 2013 as activity among foreign buyers declined by a single

deal. There was also a shift toward increased levels of color & compounding transactions through the first three quarters of 2013

Transactions by Buyer Type sector detail Q3 YTd 2012

industry News:• September 2013 – Dow Chemical Co. has taken its plastics additives business off the market as a result of not receiving sufficiently

high bids for the division. The Midland, MI-based chemical company had signaled the additives operation was for sale in March 2013, along with its polypropylene licensing and catalysts business unit. At the time Chairman and CEO Andrew Liveris described the decision to sell the business units as a “proof point of Dow’s rigorous focus on return on capital, and…squarely in line with commitments we made earlier this year.” However, in a presentation arranged by Credit Suisse on Sept. 17, Liveris said the com-pany was “quite comfortable” running the additives operation for cash. According to a transcript of the meeting, Liveris said: “This is a valuable business that is currently being undervalued by buyers in the market. As a result, we are pulling the transaction off the table and we are quite comfortable with running this business for the next several years.” Liveris declined to reveal what offers had been made but Bloomberg said analysts estimated the business was worth around $520 million. The business generates an-nual revenues of approximately $680 million and $80 million in EBITDA.

• September 2013 – U.S. research group NanoMarkets released a new report that estimates the global medical polymer market will grow from $2.3 billion to more than $3.5 billion between now and 2018. NanoMarkets believes these gains will be driven by both developing markets and aging populations. Medical polymers are popular among device manufacturers and medical professionals due to their light weight and low cost relative to metallic alternatives such as titanium. Leading medical polymers include acrylic, styrenics, polypropylene, and other elastomers.

Featured sector Transactions

September 2013 – A. Schulman, Inc. (NasdaqGS:SHLM), a Fairlawn, OH-based supplier of plastic compounds and resin, an-nounced its acquisition of Cheshire, England-based Perrite Group for approximately $52 million. Perrite, with manufacturing plants in the United Kingdom, Malaysia, and France, manufactures flame-retardant, impact modified, anti-microbial, color, and other types of resin compounds for primarily the electrical, automotive, and industrial markets. A. Schulman expects the transaction will strengthen the company’s European niche Engineered Plastics business while also moving the company into adjacent markets including insulation for the sub-sea flexible oil pipe market. The acquisition was A. Shulman’s second of the year, with the company noting it plans to remain aggressive in pursuing other acquisitions.August 2013 – Bemis Associates, a plastic film processor based in Sheboygan Falls, WI, acquired plastic resin compounder PolyVisions, Inc. for an undisclosed amount. Based in Manchester, PA, PolyVisions manufactures compounds and concentrates based on polyolefins, polyester, and engineering resins for packaging and healthcare applications. The transaction is the com-pany’s first acquisition in the compounding space, which Bemis identified as an area of growth as it aims to diversify into new markets with highly engineered products for niche applications. Bemis also noted it intends to grow its compounding business, either organically or through acquisition.

StrategicFinancial

42

14

56

35

1146

39

10

49

44

19

63

53

11

64

0

10

20

30

40

60

80

50

70

2012 Q3 YTD ‘12 Q3 YTD ‘132009 2010 2011

58

71

13

Num

ber

of D

eals

Flexible

Color &Compounding

17%

Resin Supplier83%

Flexible

Color &Compounding

39%Resin Supplier

61%

sector detail Q3 YTd 2013

Q3 YTd 2012 Q3 YTd 2013

Buyer Type

Flexible


PE to PE4%

Public Acquirer43%

Private Acquirer33%

Flexible

Private Equity (PE)17% Public Acquirer

42%


PE to PE5%

U.S.-to-U.S.

U.S.-to-Foreign

Foreign-to-U.S.

Foreign

Total

Distressed

12

3

5

26

46

-

14

5

1

29

49

-

Q3 YTD ‘12 Q3 YTD ‘13


Sources: P&M Corporate Finance, Plastics News, Company Reports, NanoMarkets


PMCF

7

global sheet and Thermoforming M&a

Trends in M&a:

• M&A activity among sheet and thermoforming processors grew by 12%, or by 3 deals, through the first three quarters of 2013. reflecting relative strength given most sectors were down year over year

• Transactions among foreign and domestic buyers each increased in total deal activity within the sector• Food & beverage transactions remained the strongest segment of sheet and thermoforming deals, increasing by two deals

versus the first three quarters of 2012. Consumer and electronics transactions were the only segments to experience declines

Transactions by Buyer Type

industry News:• September 2013 – FLOE International, a McGregor, Minnesota-based manufacturer of thermoformed products primarily for recre-

ational end-markets, unveiled plans to launch production on what could be the world’s largest three-station rotary thermoformer during the Society of Plastics Engineers Thermoforming Conference in September. The machine, which stands 40 feet tall and 75 feet in diameter, is housed in the company’s custom built 41,600 square foot building and is part of the FLOE’s strategy to grow in customer molding of large parts. Once in production, FLOE expects the new machine will provide the opportunity to mold large plastic parts that previously were not possible. The company plans to target a variety of OEMs and sees opportunity in fenders or cab closures for tractors or bus roofs, as well as the potential for thermoformed boat hulls.

• June 2013 – Plainfield, IN-based plastic pallet and container maker Jeco Plastic Products, LLC was recently hired by NASA to de-velop a door liner for a cryogenic container that will be used on the International Space Station. Jeco completed the thermoformed door liner in June 2013, and is currently awaiting the finished product to be sent to the space station. The manufacturing process was extremely tedious due to NASA’s demanding physical specifications which needed the structures to remain strong and durable at temperatures approaching -392 degrees. Jeco was chosen by NASA based on their expertise in manufacturing with unusual resins which would be necessary for NASA’s project. Jeco also manufactures a variety of other specialty products for aerospace and other markets.

Featured sector Transactions July 2013 – The Fabri-Form Company, a New Concord, OH-based heavy gauge thermoformer, has been acquired by Penda Corporation, a portfolio company of private equity groups Resilience Capital Partners and Littlejohn & Co. Fabri-Form manu-factures thermoformed packaging, material handling, and engineered components for automotive, grocery, and heavy truck markets. The transaction includes Fabri-Form’s New Concord headquarters and manufacturing facility in Byesville, Ohio, as well as two plants in Indiana and their newest facility in Ramos Arizpe, Mexico. Penda noted the acquisition will expand their manufacturing and engineering capabilities and allow the company to accelerate the development of new and appealing products. The combined company will have estimated sales of approximately $185 million, according to the most recent North American thermoformers rankings by Plastics News. PMCF served as financial advisor to The Fabri-Form Company.September 2013 – Rowmark, LLC, a Findlay, Ohio-based portfolio company of private equity group Clearview Capital, was acquired by Bertram Capital Management for an undisclosed amount. Rowmark operates in two divisions, providing engrav-able plastic sheet via its Engraving Products division and manufacturing engineered custom extruded sheet and rollstock for specialty thermoforming applications from its Premier Material Concepts division. The acquisition includes two manufacturing facilities in North Carolina and a warehouse in Belgium. The management team includes 12 people that will continue to hold an ownership stake in Rowmark and will remain intact for the new private equity owners.

StrategicFinancial

0

5

10

15

20

25

30

40

35

21

11

32

2012 Q3 YTD ‘12 Q3 YTD ‘13

20

12

32

2009

12

14

26

2010

13

12

25

2011

Num

ber

of D

eals

17

28

11

17

25

8

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

9

3

7

2

1

2

-

1

25

11

5

2

2

2

4

2

-

28

Q3 YTD ‘12 Q3 YTD ‘13

Transactions by End Market

Q3 YTd 2012 Q3 YTd 2013

Buyer Type

Flexible

PE to PE8%

Public Acquirer36%

Private Acquirer32%


Flexible

PE to PE18% Public Acquirer

18%

Private Acquirer46%


U.S.-to-U.S.

U.S.-to-Foreign

Foreign-to-U.S.

Foreign

Total

Distressed

9

2

-

14

25

1

9

3

-

16

28

-

Q3 YTD ‘12 Q3 YTD ‘13


Sources: P&M Corporate Finance, Plastics News, Company Reports

www.pmcf.com


8

global Blow Molding M&a

Trends in M&a:• Blow molding M&A activity experienced year-over-year declines across all end markets except for medical and industrial, which

increased by one transaction and remained flat, respectively• Cross-border deal volume through Q3 2013 accounted for a significant portion of the decline, decreasing from 6 transactions

through Q3 YTD 2012 to only a single deal through Q3 YTD 2013• Blow molding transactions involving strategic buyers increased to account for 54% of M&A activity through Q3 2013 versus 48%

of deals during the same period a year earlier


industry News:• August 2013 – According to industry association Petcore Europe, over 52 percent of all post-consumer PET bottles were collected

for recycling last year, totaling 60 million PET bottles and representing a 1 percent increase over the prior year. Recyclers now have an average plant utilization rate of 80 percent, which has helped ease the burden of the overcapacity issues in the region. Only two EU member states which failed to achieve PET recycling rates above the waste directive target of 22.5 percent for plastics. Fibers was the largest end-market for recycled PET, but Petcore noted that the sheet and bottle markets are exhibiting “strong growth“.

• September 2013 – A completely biodegradable bottle intended for pharmaceutical applications was claimed to have been created by the Spanish plastics research institute Aimplas along with a group of Spanish companies. These bottles, called Bio P Farm containers, decompose into water, carbon dioxide, salts, and biomass within a set period of time after manufacture. The bottles are suitable for cream, gel, shampoo, and mouthwash bottle applications. Aimplas noted in their news release, “Nowadays, this type of packaging is only manufactured with high density polyethylene due to the requirements of the manufacturing process and the characteristics of the product. From now, biodegradable materials can be used in these packages, preserving the properties of the product contained, and adding value from the environmental point of view.”

Featured sector Transactions July 2013 – Chesapeake Ltd., a former portfolio company of private equity group Irving Place Capital, was acquired by The Carlyle Group (NasdaqGS:CG) for an undisclosed amount. Based in Nottingham, England with 37 plants across 9 countries, Chesapeake manufactures value-added paper packaging products in addition to blow molded bottles, containers, and preforms for specialty chemical packaging. Carlyle plans to further develop Chesapeake’s international footprint and invest in the com-pany’s products and services. Chesapeake had estimated sales of $746 million in 2012.July 2013 – Semadeni AG, a Bern, Switzerland-based manufacturer of plastic blow molded and injection molded products, agreed to acquire an unknown majority stake in Logo-Plastic AG from the Logo Group for an undisclosed amount. Logo-Plastic manufactures blow molded containers, bottles, and other packaging products for a broad range of end markets. The transac-tion includes manufacturing operations in Bad Säckingen, Germany and Pratteln, Switzerland. Prior to the acquisition, The Semadeni Group considered itself an injection molding specialist, but the management team believes the deal will complement Semadeni’s packaging portfolio and create a more comprehensive offering to their customers.


StrategicFinancial

0

5

10

15

20

25

30

10

8

18

2012

10

11

21

Q3 YTD ‘12

7

6

13

Q3 YTD ‘13

15

16

31

2009

14

12

26

2010

17

10

27

2011

Num

ber

of D

eals

35

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

6

5

8

-

1

1

-

-

21

4

5

2

-

2

-

-

-

13

Q3 YTD ‘12 Q3 YTD ‘13

Q3 YTd ‘12 Q3 YTd ‘13

Buyer Type

Flexible Private Equity (PE)53%


Public Acquirer 14%

Flexible

PE to PE15%



U.S.-to-U.S.

U.S.-to-Foreign

Foreign-to-U.S.

Foreign

Total

Distressed

8

3

3

7

21

1

2

1

-

10

13

-

Q3 YTD ‘12 Q3 YTD ‘13


Sources: P&M Corporate Finance, Plastics News, Company Reports, Petcore Europe, Aimplas


PMCF

9

additional global specialty sector activity

Trends in M&a:• M&A activity in the first half of 2013 involving specialty plastic process types including rotational molding, foam, pipe & tube,

profile extrusion, and composites experienced declines in year-over-year deal volume, primarily driven by lower industrial supplier M&A activity

• Specialty processor deal volume increased for suppliers to the electronics, medical, and construction markets• Transaction mix among financial buyers remained strong through Q3 2013 as the overall decline in specialty M&A was accounted

for by the decline in strategic transactions, which were down by 15 deals versus Q3 YTD 2012


FEaTuREd sEcTOR TRaNsacTiONsPipe & TubeSeptember 2013 – Atkore International Holdings, Inc., a Harvey, IL-based manufacturer of steel tubes and pipe, agreed to acquire the assets of Heritage Plastics, Inc. for approximately $89 million. Based in Carrolton, OH, Heritage Plastics manu-factures PVC conduit products, fittings, elbows, and plumbing products for electrical, plumbing, and utility markets in North America. Following the acquisition, Atkore noted they are committed to expanding their core capabilities in conduit by becoming the leader within the PVC industry. According to the Plastics News 2013 North American pipe, profile, and tubing extruder rankings, Heritage ranks 37th with PVC pipe sales for the electrical/conduit market of approximately $107 million.

compositesJuly 2013 – Abdoc Participation, a holding company that, through its subsidiaries, manufactures plywood and insulated panels for industrial and car refinishing, announced its acquisition of Stratime Composite Systemes for an undisclosed amount. Based in Picardy, France, Stratime manufactures molded composite products for airport fittings, transportation, industrial, medical, and other end markets. The acquisition is expected to complement Abdoc’s current offering of composite components for automotive and airport furniture products.

Profile ExtrusionJuly 2013 – Vention Medical, Inc., a South Plainfield, NJ-based portfolio company of private equity groups Fifth Street Capital and KRG Capital Partners, acquired RiverTech Medical, LLC for an undisclosed amount. RiverTech, a manufacturer of poly-imide tubing for medical device applications, is based in Chattanooga, TN. Vention Medical views the transaction as a way to strengthen the company’s ability to deliver innovative medical components and provide superior service. Vention specializes in components and devices for interventional and minimally invasive surgical products.

August 2013 – CPG International, Inc. announced an agreement to be acquired by private equity group Ares Management, LLC and the Ontario Teachers’ Pension Plan from New York-based private equity group AEA Investors for an undisclosed amount. Based in Scranton, PA, CPG manufactures low-maintenance building materials designed to replace wood or other traditional materials via brands that include Azek Building Products and TimberTech. Since being acquired by AEA Inves-tors in May 2005, CPG has completed five acquisitions and grown sales from $220 million to approximately $500 million.

September 2013 – Derbyshire, United Kingdom-based Eurocell plc has been acquired by Netherlands-based private equity group H2 Equity Partners BV for an undisclosed amount. Eurocell manufactures a complete portfolio of PVC-u profiles for building products, including windows, doors, conservatories, and roofline products. The acquisition includes the company’s manufacturing operations as well as 124 sales branches throughout the United Kingdom and Ireland. Eurocell has sales of approximately $225 million.


StrategicFinancial

0

10

20

30

40

50

60

70

90

80

2012

20

38

58

Q3 YTD ‘12

20

23

43

Q3 YTD ‘13

53

27

80

2009

50

28

78

2010

57

29

86

2011

27

33

60

Num

ber

of D

eals

Food and Beverage

Industrial

Consumer

Construction

Medical

Automotive

Transportation

Electronics

Total

-

29

6

18

-

3

2

-

58

-

10

4

20

5

1

1

2

43

Q3 YTD ‘12 Q3 YTD ‘13

Source: P&M Corporate Finance, Company Reports

www.pmcf.com


10

PMCF Plastics & Packaging Index S&P 500 Index

Note: Chart highlights relative stock price return

Sep- 13Sep - 11 Dec - 11 Mar-12 Jun-12 Sep- 12 Dec - 12 Mar- 13 Jun-1370%

90%

110%

130%

150%

170%

190%

PMcF Plastics & Packaging index

PMcF Plastics & Packaging index Valuation

• The PMCF Plastics & Packaging Index outperformed the S&P 500 index by nearly 4% during Q3 2013, increasing approximately 8.1% versus the 4.1% gain experienced by the S&P 500 index

• Publicly traded plastics businesses also continued to experience strong increases in average EV/EBITDA valuations year-over-year after the PMCF Plastics & Packaging Index posted its third consecutive quarter trading above a median of 8.0x EV/EBITDA

Q3 ‘13Q3 ‘11Revenue Multiple

AverageMedian

EBITDA MultipleAverageMedian

0.8x0.7x

6.4x6.7x

0.8x0.8x

6.2x6.0x

0.9x0.9x

6.9x7.1x

0.9x0.9x

7.1x7.4x

Q4 ‘11 Q1 ‘12

0.9x0.9x

7.2x7.2x

Q2 ‘12

1.2x1.1x

8.6x8.3x

1.0x0.9x

7.6x7.3x

Q3 ‘12

1.2x1.1x

9.3x8.6x

Q4 ‘12

1.2x1.2x

9.5x8.8x

Q1 ‘13 Q2 ‘13

u.s. Private Equity deal activity

No. of Deals Disclosed Deal Value

Num

ber

of D

eals

0

Dea

l Val

ue ($

in B

illio

ns)

$0$50$100$150$200$250$300$350$400$450$500

2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000

12,272

2006

13,012

2007

11,531

2008

10,342

2009

14,315

2010

16,126

2011 2012

18,133

12,506

Q3 ‘12 Q3 ‘13

12,063

20,000

No. of Deals Capital Invested

Num

ber

of D

eals

$00

Dea

l Val

ue ($

in B

illio

ns)

585

Q3Q1

512

Q2

467

Q1

477

Q3

658

Q4

562 563

Q1

563

Q2

$20

$40

$60

$80

$100

$120

$160

100

300

400

500

600

700

800

Q2

200

Q3 Q4 Q2 Q1 Q3 Q4201320112010 2012

713

512550 497

489455 420

$140

• Overall middle market M&A activity experienced declines in both deal volume as well as total transaction value through the first three quarters of 2013 versus the same period a year earlier

• Private equity investments rebounded from declines experienced through the first half of 2013, with private equity deal volume and total transaction value each increasing over Q2 2013 levels

u.s. M&a activity — deals < $500M

u.s. Middle Market Transaction summary (all industries)

Source: Capital IQ, Pitchbook, and PMCF Estimates

Note: Multiples based on most recent data available as of printingSource: Capital IQ

*Includes all disclosed transaction with at least one U.S. party

www.pmcf.com

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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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