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Top Plastics Industry M&A and Performance Trends of 2024, So Far
M&A transactions have maintained a steady pace from the previous year, and while overall performance for plastics businesses has been flat, market conditions are expected to improve in the second half of the year.
Michael Benson and David Evatz
August 16, 2024
3 Min Read
metamorworks/iStock via Getty Images
The first half of 2024 has been marked by significant activity and resilience within the plastics industry despite numerous challenges. This article explores the key trends shaping the sector this year, highlighting the factors driving M&A activity, operational struggles, and the evolving market landscape.
Resilient M&A activity
The plastics industry saw 170 M&A transactions from January through June 2024, maintaining a steady pace from the previous year. This consistent activity underscores the market’s resilience amid ongoing macro-economic and geopolitical uncertainties. Despite heightened operating costs, upward wage pressures, and end-market softness, the appetite for quality assets remains strong, evidenced by several notable transactions in the first half of the year:
DuPont acquired Donatelle Plastics Inc.
Nordson Corp. acquired Atrion Corp.
Ingersoll Rand acquired ILC Dover
Prysmian acquired Encore Wire
Amphenol Corp. acquired the Carlisle Interconnect Technologies business of Carlisle Companies Inc.
Looking ahead, the outlook for M&A activity remains cautiously optimistic. Improved conditions in debt markets and more favorable pricing are starting to support higher leverage ratios, potentially lifting valuations and spurring further M&A activity through the rest of the year.
Market performance and operational challenges
Overall performance for many plastics businesses has remained flat through the first half of 2024. Lingering destocking efforts by end customers and demand softness in certain segments have dampened volumes. Continued inflation and higher operating costs have further impacted the industry’s performance.
However, there is an expectation that stocking levels for products used in non-cyclical end markets will stabilize in the latter half of the year, although some segments may continue to experience volatility. Labor market volatility has decreased, but US labor force participation is expected to decline, potentially amplifying wage-growth pressure.
Strategic shifts in buyer and seller activity
In 2024, private equity activity has stalled amid uncertainty, with strategic and corporate buyers stepping in to fill the void. Financial buyer activity decreased significantly, while corporate carve outs and take-privates have been strong as private markets cool down. This shift indicates a strategic realignment in the market, with businesses adjusting to the evolving economic landscape.
Macro performance and economic indicators
Despite ongoing uncertainties, the global economy has shown resilience, with many macro-economic indicators stabilizing. The unemployment rate has seen a slight uptick, and real US GDP growth has moderated. Inflation has shown signs of cooling, largely due to the Federal Reserve’s high interest rates throughout 2023 and early 2024. The Fed’s indication of potential rate declines in the latter half of the year provides a cautiously optimistic outlook.
Industry trends and commodity pricing
The manufacturing sector remains in contraction, with the Purchasing Managers’ Index (PMI) registering below expansion territory by mid-2024. However, optimism among manufacturers is rising, with expectations for growth by the end of the year. Commodity and resin pricing trends have varied, with oil prices rising and natural gas prices declining. Resin prices have broadly increased, driven by healthy demand and production levels in certain sectors, such as automotive.
Near-term sentiment and future outlook
Sentiment among plastics processors has trended downward in Q2, partly due to a gradual slowdown in demand for durable goods. Capacity utilization has remained low, but processors forecast an increase by year-end. Hiring trends align with broader manufacturing, with many processors planning to maintain current levels or add to their workforce.
Despite these challenges, the industry is finding some relief as wage pressure and labor access improve. Many businesses are successfully passing on material and inflationary costs, focusing on controlling what they can to run profitable operations in a changing marketplace.
Looking forward
The plastics industry in 2024 is navigating a complex landscape marked by resilience and strategic shifts. While operational challenges persist, the sector is adapting, with businesses focusing on efficiency and strategic realignments to drive success. The remainder of the year holds cautious optimism, with improved market conditions and strategic activities poised to shape the industry’s future.
About the Author
Michael D. Benson is a managing director in Stout’s Investment Banking Group. He is responsible for the execution of investment banking transactions, which include mergers, acquisitions, divestitures, and the private placement of senior debt, subordinated debt, and equity securities. 
David M. Evatz leads the Plastics & Packaging Industry Practice within Stout’s Investment Banking Group. He has extensive mergers and acquisitions experience, having executed numerous M&A and corporate finance transactions, including buy and sell side assignments, leveraged buyouts, joint ventures, fairness opinions, and the private placement of senior debt, mezzanine debt, and equity securities.
Stout provides a full range of strategic alternatives including merger and acquisition (M&A) advice, private capital raising, financial sponsor coverage, and other financial advisory services to family-owned businesses, portfolio companies of private equity firms, and divisions of large corporations.
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