Blaige

Several analysts interviewed by Plastics News noted increases in the numbers of plastics mergers and acquisitions deals in the first half of 2008 versus the same period in 2007.

In a July 10 telephone interview, John Hart, director of P&M Corporate Finance LLC’s plastics and packaging group in Southfield, Michigan, said while U.S. buyers acquiring foreign firms decreased -- 19 deals in 2008 compared with 21 in 2007 -- foreign buyers were more active -- 12 transactions in 2008 as opposed to nine in 2007.

Cross-border deals where foreign buyers gobbled up U.S. firms increased in all sectors except specialty markets, sheet extrusion and blow molding, he said. But he expects U.S. buyers to be on the move during the second half of the year.

The largest sector in the first half of both years was film, which represented more than 30 percent of total transactions. U.S. buyers outnumbered foreign buyers 2-to- in both periods, Hart said.

“With the U.S. markets being down, U.S. companies are looking to follow their customers and looking to gain in those developing markets,” he said.

In a July 9 telephone interview, Tom Blaige, president of Blaige & Co. in Chicago, said film and sheet should end this year with a 72 percent increase in mergers and acquisitions activity, driven by a wave of cross-border deals. Raw materials and compounding should also experience strategic cross-border transactions by companies focused on vertical integration and geographic expansion, he said.

Blaige predicts pipe, profile and tube extrusion mergers and acquisitions will increase by nearly 60 percent, driven primarily by cross-border sales of privately held niche companies. PVC and specialty chemicals maker Mexichem S.A.B. de C.V. of Mexico City, Mexico, completed four transactions in Latin America in the sector during the first half of 2008, followed by Moline, Illinois-based Deere & Co.’s two deals in the United States and Israel that made them the world’s third-largest irrigation company.

“[Mergers and acquisitions] has never been a real factor before in Latin America,” Blaige said. “”You’ve got a lot of companies that are competing in a globsalized marketplace and they’re seeing the need to get bigger.” As for Deere & Co. “this irrigation thing has popped up as a consolidation ploy,” he said.

In a July 3 e-mail, Bill Ridenour, owner of Polymer Transaction Advisors Inc of Newbury, Ohio, said international buyers have been behind 14 percent of all mergers and acquisitions deals in North America in the first half of 2008. “We had expected a higher level of completions from the [Europeans], who have a huge bid advantage of a 57 percent euro/dollar premium,” he said.

Ridenour said he also expects international buyer activity to pick up in the second half of 2008, as foreign buyers become more aggressive in North America.