Acquisitions in the plastics industry have shown a steady decline since 2004, according to research by Curtis Financial Group LLC (Philadelphia, PA). The 6.3% drop from 2006-2007 (reflected in figures from the first nine months of the year) resulted from a decrease in new platform investments by private equity firms, and points to the lowest Q1-Q3 deal activity of the last five years.
“Our analysis clearly shows that plastics industry M&A activity over the last several years has been significantly driven by the involvement of private equity investment funds. Anecdotal evidence from a number of private equity groups identify capital debt markets weakness and increased macroeconomic uncertainty as contributing underlying causes,†says Howard M. Snyder, VP of Curtis' Plastics & Packaging Group.
Here are more observations by the corporate finance firm:
- For the first time in the 19 quarters since Curtis began tracking M&A data, extrusion was the most active M&A segment, accounting for 38% of the total and exceeding injection molding, which accounted for 31.6% of all deals.
- Private equity firms, management teams, and individuals made just 14 new platform investments compared to 23 new platform investments in all of 2006.
- Total new platform investments plus acquisitions by private-equity-backed processors were down 22.6% compared to the first nine months of 2006.
- Total acquisitions by publicly traded and privately owned processors were up 4.2% in 2007 compared to the first nine months of 2006.
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