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M&A surge alters supplier landscape

January 1, 2006

3 Min Read
M&A surge alters supplier landscape

Processors of thermoset plastics need to be on their toes if they want to track the name and ownership of their suppliers. Mergers and acquisitions have dramatically reshaped the supplier market.

Biggest of the recent acquisitions was completed in June when Borden Chemicals, Resolution Performance Products, and Resolution Specialty Materials completed their merger. Borden earlier in the year had acquired Bakelite AG. The merged firms form new company Hexion Specialty Chemicals, a $4.1 billion business. Though that number includes sales outside the thermoset plastics industry, Hexion lays claim to leading positions globally for phenolic and epoxy resins, tops in Europe for molding compounds, and tops in Europe and second in North America for epoxy-based composite resins. Hexion is owned by Apollo Management LP, a private investment firm based in New York

That would normally be enough change for one year, but there have been other significant deals as well. Bulk Molding Compounds Inc. (BMCI; West Chicago, IL) in May acquired the assets and operations of Rodgers Engineering Corp. (Addison, IL), a custom compounder and molder of thermoset molding compounds with facilities in El Paso, TX, and Elburn, IL, in addition to its Addison, IL, headquarters. Earlier in the year BMCI announced a 50-50 joint venture with Hong Kong''s Emei Group to supply bulk molding compounds from BMC Far East Ltd. in Dongguan (Guangdong Province), China, with headquarters in Hong Kong.

Emei includes manufacturing and trading companies principally involved in electronics applications within China and the Pacific Rim. Jack Horner, formerly BMCI''s manager of technical services (U.S.), has been promoted to the position of director of operations for BMC FE. He lives in Dongguan.

BMCI entered China in 2001 when it licensed a firm there to use its formulations and name under the firm BMC Asia Pacific Ltd., but it ended that relationship after it discovered the licensee firm was not following its recommended manufacturing procedures and equipment recommendations.

The Rodgers acquisition increases BMCI''s annual compounding capacity from 250 billion lb to 350 billion lb. BMCI officials cited Rodgers'' geographic dispersion as a huge benefit, since thermosets do not lend themselves economically to long shipping routes. BMCI is considering divesting Rodgers'' processing operations.

BMCI says it has steady annual growth of 5-10%, and MPW has heard repeatedly in the last months, especially at injection molders, that thermoset processing is enjoying a resurgence following some years where its growth was stymied.

In other acquisition news, engineering phenolics supplier Vyncolit (Ghent, Belgium) acquired Sumitomo Bakelite, the world''s largest producer of phenolic molding compounds and one of the leading global developers and producers of specialty phenolic resins. Most of Vyncolit''s business is to supply specialty phenolic compounds to automotive components and parts processors.

Processors of thermosets have benefited from a range of material developments that should help them penetrate new markets and defend established ones in the year ahead. Recent material introductions include Vyntec composites from Vyncolit that take advantage of short-carbon-fiber reinforcement. Vyntec is targeted at metal replacement applications and marketed to processors of automotive pump parts, high-performance pistons and bearings, EMI shielded housings, and other applications where high-temperature resistance is critical. The supplier claims it is the first commercialized short-carbon-fiber phenolic compound and is less costly than CF-reinforced PEEK (polyetheretherketone). The first customer for the new material is an unidentified automotive components and parts processor.

Also relatively new to the market is a thermoset compound developed by Perstorp Compounds (Perstorp, Sweden), said to be the first tested and proven to kill the SARS corona virus on contact. It also kills a wide variety of other bacteria, yeasts, and molds.

Part of the supplier''s Polygiene range of materials for products requiring highly hygienic surfaces, the anti-SARS compound is nontoxic and does not release any volatile organic compounds. Perstorp introduced Polygiene anti-bacterial grades in 2001 and has seen demand increase 400%/yr since then. The anti-SARS compound can be processed via injection molding or compression molding and a part''s surface has a permanent hygienic solution-there is no need for cleaning or sterilization.

Matthew Defosse [email protected]

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