SAZUN BLOG
November 26, 2019

Industry Insight Plastic Compounds – Multinational companies trying to grow production capacities and to acquire green technologies

“Welcome to our new Plastic Compounds Industry Insight, giving you a brief market overview especially from an M&A perspective. In general, consolidation is actively pursued by multinational companies trying to grow production capacities and to acquire green technologies, which are to become paramount in the near future.”

Market Insights

Market Overview

Plastic compounding is a method for transforming the characteristics of engineered thermoplastics using a blend of plastics and additives.

Global Market
in USD bn

The demand for plastic compounds is expected to increase sharply, while growing environmental concerns pose numerous challenges for producers
While many studies attribute different values to the total market size, there is consensus on the growth trajectory of 5-7% annually
The growth of the market is largely attributed to a rising adoption of plastic compounds in various industries, such as in manufacturing, healthcare and the automotive industry


Global Trends

As sustainability climbs the political agenda, it also forms a trend in plastics: lower carbon footprint, incorporation of CO2, utilization of sustainable feedstocks and natural polymers, life cycle analysis, utilization of waste streams

Recycling will become more of a topic in the future, driving demand for easy-to-recover and recyclable materials

Specialty materials for niche applications (e.g. epoxy adhesives vs epoxy composite matrices) promise better returns than commodity polymers

Polymers for biomedical materials are expected to see a substantial increase in demand. This includes tissue scaffolds, bioreactors, surgical materials, drug delivery materials, in-body polymers for joint replacements and prosthetics, polymeric drugs etc.

As 3D printing grows in importance, specialty polymers for 3D printing applications will see a significant rise in demand

Selected Transactions

International Peer Group

Valuation: EV/EBITDA next twelve months

 

The international peer group consists of global compounders and producers of masterbatches
Valuations range from 5x EBITDA to 10x EBITDA, with an average of 7x EBITDA
Valuations have been stable over the last months, despite a smaller dip in mid-2018, when stock markets took a general hit. This highlights the industry’s overall stability and low risk profile

Key Performance Indicators

 

Want to know more?

If you would like to learn more about the valuations and deals of your industry, the transaction mentioned above or generally our way of working, we would certainly be happy to demonstrate our m&a PLUS® principle in a confidential meeting.
Just get in touch and we will share our experience on how to grow businesses with long-lasting partnerships.

With passion for M&A,
Your SAZUN Team