September 2012 - PMCF

PLASTICS & PACKAGING MONITOR SEPTEMBER 2012

INSIDE THIS ISSUE

Select Transactions in Plastics & Packaging Page 3 Plastics & Packaging Equity Valuation Page 4 Plastics & Packaging Transaction Statistics Page 5

Top News in PLASTICS & PACKAGING August 3, 2012 – According to a recent study by German research group Ceresana Research, the global market for polypropylene will reach approximately $155 billion by 2019. The report cites strong growth in emerging markets as a key driver for the projected growth. Countries in the Asia-Pacific region currently account for more than half of global polypropylene sales and they are expected to continue to create significant demand accounting for approximately 57%, or 23.5 million metric tons of total new capacity through 2019. The transportation market, which is projected to grow at an annual rate of 5.8%, will account for the largest increase in demand for polypropylene during the projected period according to Ceresana. August 9, 2012 – Global demand for aseptic packaging is projected to grow approximately 24% in total over the next five years according to a new report by food and drink consultancy group Zenith International and packaging experts Warrick Research. Zenith and Warrick’s report, Global Aseptic Packaging, calculated aseptic demand at approximately 123 billion liters across 269 billion packs for 2011 with milk and other dairy products accounting for 61% of the sector. Even during the recession, the market for aseptic packaging grew at over 5% per year, which suggest strong future growth within the sector as the economy continues to recover and technological innovations create more efficient aseptic packaging. Zenith and Warrick expect aseptic packaging to reach 153 billion liters across 333 billion packs by 2016, with China and Southeast Asia regions driving significant growth. August 9, 2012 – PCI Films Consulting, Ltd., a United Kingdom-based research and consulting firm specializing in plastics and chemicals, recently released a report citing significant recent growth in flexible packaging demand among emerging markets. The report, titled Emerging Flexible Packaging Markets to 2016 identifies 13 emerging flexible packaging markets that have grown by nearly 70% since 2006 to account for approximately 20% of total global demand. PCI attributes the growth to a variety of factors including strong GDP growth, population growth, urbanization, and continued development of mass retailing. Evolving consumer lifestyles have also played a key role in driving flexible packaging demand within these countries. Going forward, demand is expected to continue to experience strong growth with customers converting from rigid non-plastic products (fiber, etc.) as flexible packaging capabilities expand to include more value-added sectors such as high barrier films and pouches.

JOHN HART 248.223.3468 [email protected] MATT JAMISON 248.223.3368 [email protected] RYAN SHUCHMAN 248.603.5372 [email protected] plastics.pmcf.com

August 15, 2012 – According to the report, World Rigid Packaging to 2016, global demand for rigid packaging will increase 6.4% annually from $345 billion in 2011 reaching approximately $472 billion by 2016. The report, authored by Cleveland-based Freedonia Group, lists India and Indonesia as the fastest growing regions while China will account for the most significant gain in global value, accounting for approximately 46% of rigid packaging growth between 2011 and 2016. Within the rigid packaging sector, plastic products will continue to account for the largest share as plastics continue to capture market share from metal, paperboard, and glass packaging products. September 20, 2012 – Evansville, IN-based Berry Plastics is preparing for its initial public offering in coming weeks where the company expects to raise approximately $468 million. The company first announced its plans for an IPO in March, and Berry is expected to begin trading on October 4th, shortly after the printing of this issue. Berry stated it plans to use $455 million of the IPO proceeds to redeem senior subordinated debt with the remainder of the funds to be used for working capital and general corporate purposes. Apollo Management, the New York-based private equity group that owns Berry, expects the IPO to price at approximately $16-$18 per share, which would value the company as high as $2 billion. Sources: Associated Press, Plastics News, Company Reports, Ceresana Research, Freedonia Group, Zenith Int’l, Warrick Research, Packaging Digest

About P&M Corporate Finance P&M Corporate Finance (“PMCF”) is an investment banking firm, focused exclusively on middle market transactions, with professionals in Chicago, Detroit, and across the globe through Corporate Finance International affiliates. Our dedicated Plastics & Packaging Group has extensive industry knowledge and covers a wide range of processes including thermoforming, extrusion, blow molding, injection molding, resin, and color & compounding. Offering a depth of advisory services, the Plastics and Packaging Group has helped clients worldwide meet their sale, acquisition, financing, and strategic growth objectives.

John Hart

Co-Lead, Plastics & Packaging

Investment Banking Services: • Mergers and Acquisitions • Sales and Divestitures • Capital Raising

Matt Jamison

Co-Lead, Plastics & Packaging

• Strategic Assessments • Fairness Opinions

CHICAGO

DETROIT

225 W. Washington St., Suite 2700 Chicago, IL 60606 312.602.3600

26300 Northwestern Highway, Suite 120 Southfield, MI 48076 248.223.3300

This market overview is not an offer to sell or a solicitation of an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or recommend securities of individual companies, nor does it contain sufficient information upon which to make an investment decision. P&M Corporate Finance, LLC will seek to provide investment banking and/or other services to one or more of the companies mentioned in this market overview. P&M Corporate Finance, LLC, and/or the analysts who prepared this market update, may own securities of one or more of the companies mentioned in this market overview. The information provided in this market overview was obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not to be construed as legal, accounting, financial, or investment advice. Information, opinions, and estimates reflect P&M Corporate Finance, LLC’s judgment as of the date of publication and are subject to change without notice. P&M Corporate Finance, LLC undertakes no obligation to notify any recipient of this market overview of any such change. The charts and graphs used in this market overview have been compiled by P&M Corporate Finance, LLC solely for illustrative purposes. All charts are as of the date of issuance of this market overview, unless otherwise noted. The PMCF Plastics Index may not be inclusive of all companies in the plastics industry and is not a composite index of the Plastic industry sector returns. Index and sector returns are past performance which is not an indicator of future results. This market overview is not directed to, or intended for distribution to, any person in any jurisdiction where such distribution would be contrary to law or regulation, or which would subject P&M Corporate Finance, LLC to licensing or registration requirements in such jurisdiction.

3 Plastics & Packaging Monitor – September 2012

Select Transactions in Plastics & Packaging Date

Buyer

Target

Industry/ Application

Enterprise Value ($mm)

EV/EBITDA

Medical Industrial Industrial Automotive Industrial Consumer Food & Beverage Industrial Automotive

224.1 47.8 27.5 459.0 -

-

Injection Molding 1-Jun-12 6-Jun-12 12-Jun-12 25-Jun-12 29-Jun-12 3-Jul-12 1-Aug-12 6-Aug-12 3-Aug-12 Blow Molding 9-Jul-12 20-Jul-12 14-Aug-12

Röchling-Group AXA Private Equity CASAR Drahtseilwerk Saar GmbH Rosti A/S Myers Industries Inc. (NYSE:MYE) Sun Capital Partners Ltd. One Equity Partners LLC Tosca Limited Universal Bearings, Inc.

Advent Tool & Mold, Inc. Novotema S.p.A. Royal Lankhorst Euronete Group BV McKechnie Engineered Plastics Ltd. Plásticos Novel do Nordeste SA Rexam PLC, Personal Care Unit Grupo Phoenix Capital Ltd Georgia-Pacific RPC LLC Precision Plastic & Die Company

Wheaton Industries, Inc. IDEX Corporation (NYSE:IEX) Consolidated Container Company LLC

Wilson Wolf Manufacturing Corporation, CELLine Matcon Ltd. Roffe Container, Inc.

Medical Industrial Food & Beverage

37.5 -

-

Dynea N.V. Zhejiang Wanma Macromolecule Changzhou Tianma Group Co Ltd Dow Chemical, TP-Series Specialty Plasticizer Line ITWC, Inc. Huntsman-NMG, ZAO Regulus Co., Ltd. KP Chemical Corp ECM Plastics, Inc. DuPont Performance Coatings, Inc.

Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial Industrial

26.8 18.9 536.9 36.5 5153.0

8.0x -

Bloomer Plastics, Inc. Klöckner Pentaplast GmbH & Co. KG NEPTCO, Inc. NORDENIA International AG Superior Multi-Packaging Ltd. (SGX:S47) Flexofol - Verpackungen GmbH Minigrip Commercial

Industrial Food & Beverage Industrial Consumer Food & Beverage Food & Beverage Industrial

238.0 67.0 706.4 70.2 -

5.9x 6.1x 12.2x -

Rexam PLC, Plastic Thermoformed Food Business Sora Composites, Car Part Business Analytic Plastics Inc. Athena Kogyo Co. Ltd. (JASDAQ:7890) MAYWO Kunststoff GmbH

Food & Beverage Automotive Electronics Food & Beverage Industrial

250.0 49.4 -

2.9x -

Construction Industrial Industrial Consumer Industrial Construction Construction Industrial Industrial Industrial Construction

19.6 -

-

Resin and Color & Compounding 1-Jun-12 8-Jun-12 28-Jun-12 2-Jul-12 3-Jul-12 3-Jul-12 20-Jul-12 14-Aug-12 20-Aug-12 30-Aug-12

SpanoGroup NV Zhejiang Wanma Cable Co Ltd Zhongqi Xinxing Nanjing The HallStar Company BASF SE (DB:BAS) Huntsman Corporation (NYSE:HUN) Innotech Corp. (TSE:9880) Honam Petrochemical Corp A. Schulman, Inc. (NasdaqGS:SHLM) The Carlyle Group (NasdaqGS:CG)

Film 8-Jun-12 21-Jun-12 27-Jun-12 10-Jul-12 15-Aug-12 6-Aug-12 2-Aug-12

Huron Capital Partners, LLC Strategic Value Partners, LLC Chase Corp. (AMEX:CCF) Mondi Group CROWN Asia Pacific Holdings Ltd. Schur Flexibles Holding Inteplast Group, Ltd/ Sheet & Thermoforming 3-Jul-12 18-Jul-12 30-Jul-12 8-Aug-12 24-Aug-12

Silgan Holdings Inc. (NasdaqGS:SLGN) Faurecia S.A. (ENXTPA:EO) CW Thomas Inc. Shimono Corporation, K.K. Röchling Engineering Plastics KG

Specialty Processes (Rotomolding, Form, Profile Extrusion, & Other) 8-Jun-12 13-Jun-12 22-Jun-12 2-Jul-12 10-Jul-12 31-Jul-12 15-Aug-12 15-Aug-12 17-Aug-12 20-Aug-12 29-Aug-12

Compagnie de Saint-Gobain (ENXTPA:SGO) Hudaco Industries Ltd. (JSE:HDC) Odyssey Investment Partners, LLC Plaskolite, Inc. Dura-Line Holdings, Inc. Gladstone Investment Corporation (NasdaqGS:GAIN) Euramax International, Inc. Pregis Corp Southern Imperial, Inc. Ensinger Group Ltd OpenGate Capital

Celotex Group Ltd. Keys Makin Plastics, Quality Compounding Proprietary Ltd Pexco LLC Bayer MaterialScience, LLC, Vivak Polyester Sheet Business Nextube (Pty) Ltd. Drew Foam Companies, Inc. Cleveland Tubing, Inc. Inter-Pac Inc Sunbelt Plastic Extrusions, Inc. Jet Engineering (Scotland) Ltd. Wymar International NV

Featured Transaction – Packaging

Featured Transaction – Marquee Deal

August 15, 2012 — Deerfield, IL-based protective packaging manufacturer Pregis Corporation announced its acquisition of Inter-Pac, Inc. for an undisclosed amount. Based in Tupelo, MS, Inter-Pac manufactures polyethylene foam products for protective packaging with applications in industrial and consumer markets. The acquisition includes Inter-Pac’s 180,000 square foot manufacturing facility and 25 employees.

August 30, 2012 — The Carlyle Group (NasdaqGS:CG), a New York-based private equity group with global offices, agreed to acquire the DuPont Performance Coatings business from E.I. du Pont de Nemours and Company (NYSE:DD) for approximately $5.2 billion. DuPont’s Performance Coatings business unit, a leader in the automotive and industrial coatings sectors, is expected to generate 2012 sales of approximately $4 billion. Following the sale, DuPont will continue to remain in the automotive sector its DuPont Automotive division.

Following the transaction, Pregis will be the largest manufacturer of polyethylene foam sheet in the United States. Pregis views the acquisition as an opportunity to boost its capacity while better utilizing the company’s footprint to position Pregis closer to its East Coast customers. The deal creates significant opportunities for Pregis to bring its broad range of products to Inter-Pac’s customers while also continuing the company’s focus on its core business of foam, bubble, and mailer products. Prior to the transaction Pregis operated 25 facilities across 10 countries, generating approximately $500 million in sales.

Carlyle believes the DuPont Performance Coatings business will continue to grow and deliver strong results. The group believes DuPont provides a platform with a history of success as well as attractive market positions, next generation technologies, and an established brand. Carlyle plans to support the company’s growth objectives through targeted investments as it transitions to a stand-alone company.

plastics.pmcf.com

4 Plastics & Packaging Monitor – September 2012

Plastics & Packaging Equity Valuation Financials / Metrics ($USD) (8/31/11) Company Name

LTM EBITDA

Market Cap

12,559 2,316 5,971 5,246 7,765 7,222 3,574 4,669 $ 6,165

$ 1,326 $ 411 585 615 1,149 918 510 573 $ 761 $

9,340 3,373 3,169 3,125 5,993 2,771 2,912 3,079 4,220

$ 22.50 20.10 20.30 19.30 13.20 NA 18.50 15.50 $ 18.49

9.6x 8.4x 7.5x 7.4x 7.1x 7.9x 8.5x 7.2x 8.0x

9.9x 7.8x 7.9x 7.4x 6.1x 6.8x 6.7x 7.1x 7.5x

7.7x 7.9x 7.2x 7.1x NA 6.9x 8.1x 6.8x 7.4x

$

74 $ 278 254 1,237 88 329 217 1,164 99 517 127 1,058 143 $ 764

16.40 13.30 17.00 15.80 16.40 15.50 $ 15.73

9.3x 5.6x 8.5x 6.6x 5.7x 7.2x 7.2x

7.9x 5.4x 8.1x 6.4x 5.9x 6.2x 6.6x

NA 5.4x 6.7x NA 5.4x 6.7x 6.1x

125 $ 718 901 3,245 486 3,154 120 284 167 1,398 360 $ 1,760

15.90 19.40 18.40 NA 18.50 $ 18.05

6.9x 6.0x 6.9x 5.0x 10.2x 7.0x

7.1x 5.3x 6.1x 6.8x 5.1x 6.1x

6.5x NA 8.8x 4.9x 6.3x 6.6x

189 $ 1,821 1,368 248 427 75 3,860 798 499 79 1,362 543 251 35 156 53 484 36 229 $ 1,136

26.60 17.30 41.40 17.70 17.40 7.00 15.00 NA 250.50 $ 49.11

11.2x 7.7x 7.9x 8.4x 7.1x 4.0x 5.6x 5.6x 15.2x 7.2x*

8.0x 9.5x 8.0x 7.3x 4.2x NA 6.3x 7.2x 13.2x 7.2x*

NA 6.2x 6.9x 7.9x 6.2x NA NA 5.1x 9.5x 6.5x*

LTM Revenue

Symbol

Large Packaging (Large) Amcor Ltd. AptarGroup, Inc. Avery Dennison Corp. Bemis Co. Inc. Rexam plc Sealed Air Corp. Silgan Holdings Inc. Sonoco Products Co. Large Average

ASX:AMC NYSE:ATR NYSE:AVY NYSE:BMS LSE:REX NYSE:SEE NasdaqGS:SLGN NYSE:SON

Mid-Size Packaging (Mid) AEP Industries Inc. CCL Industries, Inc. Multi-Color Corp. RPC Group plc Tredegar Corp. Winpak, Ltd. Mid-Size Average

NasdaqGS:AEPI TSX:CCL.B NasdaqGS:LABL LSE:RPC NYSE:TG TSX:WPK

$ 1,119 1,336 575 1,826 838 674 $ 1,061

Color & Compounders (C&C) A. Schulman, Inc. Clariant AG Cytec Industries, Inc. Ferro Corp. PolyOne Corp. C&C Average

NasdaqGS:SHLM SWX:CLN NYSE:CYT NYSE:FOE NYSE:POL

$ 2,160 8,247 3,172 1,937 2,949 $ 3,693

$

$ 965 3,331 781 6,694 763 5,947 382 1,156 310 $ 2,259

$

Diversified and Industrial Plastics (Diversified) Filtrona plc. LSE:FLTR Georgia Gulf Corporation NYSE:GGC Intertape Polymer Group, Inc. TSX:ITP Jarden Corp. NYSE:JAH Myers Industries, Inc. NYSE:MYE ENXTPA:POM Plastic Omnium SA DB:SIM Simona AG NYSE:SEH Spartech Corp. NYSE:TREX Trex Co. Inc. Diversified Average

$

$

$

Mid

C&C

Diversified

% return

3 Year ^ Average Projected

Income Statement data as of last period date reported Currency conversion rate as of 8/31/2012

•A  side from Large Packaging, all other PMCF components experienced slight multiple increases through August 2012, with the Color & Compounding component experiencing the largest increase from 6.6x to 7.0x EBITDA.

200%

150%

•T  he Diversified component of the PMCF Index was the index’s strongest performing sector growing approximately 15.8% higher over the last 3 months while all other index components except Large Packaging outperformed the S&P 500.

100%

50%

9 g-0

Current

•T  he Large Packaging component of the PMCF Index continues to trade at the highest levels of the index at 8.0x EBITDA despite a small decline from the previous month’s level of 8.2x EBITDA.

S&P 500

250%

Au

Price/ Earnings

PMCF Key Takeaways and Analysis

Performance of PMCF Indices vs. S&P 500 Large

EV / EBITDA Multiples

9

v-0

No

-10

Feb

P&M Corporate Finance, LLC

0

y-1

Ma

g-1

Au

0

0

v-1

No

-11

Feb

1

y-1

Ma

1 g-1

Au

1

v-1

No

-12

Feb

2

y-1

Ma

2 g-1

Au

Source: Capital IQ ^Based on available Capital IQ Analyst summaries *Excludes Trex Co. Inc.

5 Plastics & Packaging Monitor – September 2012

Plastics & Packaging Transaction Statistics Plastics & Packaging Transactions (Jun 11 – Aug 12) 50

Financial Add-on 1,011

Strategic

Transactions by End Market

Financial Platform

End Market

45 40 34

35 30

30

25

7

20

5

5 0

24

4

4

6

6

15 10

28

27 23 1 5

22 1 5

4

22

4

2

36

34

3

31

5

6 5

31

31

3

4

9

7

5 3

7

5

28

5 10

4

5

4 26

18

18

14

17

16

19

23

20

19

15

20

20

24 19

15

Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12

Blow Molding 7% Sheet & Thermoforming 12%

Jun 12 – Aug 12

Resin / Color & Compounding 13%

% of Dec–Jan % of Total 09–10 Specialty Total 13%

Blow Molding 4% Sheet & Thermoforming 8% Injection Resin / Color & Molding Compounding 25% 20%

Injection Molding 33%

Specialty 21%

Film 22%

Film 23%

Packaging Detail

% of Total

12

14.6%

12

12.9%

33

40.2%

45

48.4%

15 9 3 6 3 1

18.3% 11.0% 3.7% 7.3% 3.7% 1.2%

11 6 8 7 1 3

11.8% 6.5% 8.6% 7.5% 1.1% 3.2%

82

100%

93

100%

Transaction volume for the Plastics and Packaging industry from June 2012 through August 2012 was characterized by the following trends: •O  verall plastic and packaging transaction volume during June 2012 through August 2012 increased by 11 deals, or approximately 13% versus the same period one year earlier •M  onthly deal activity experienced its steepest decline over the last 15 months dropping to 23 transactions following heightened levels experienced during June and July 2012

•M  &A activity involving packaging companies remained strong as total transaction volume declined by only two transactions during the comparison period

% of Jun 12– Total Aug 12

% of Total

Rigid Packaging

11

42.3%

10

41.7%

Flexible Packaging

11

42.3%

13

54.1%

Bottles

4

15.4%

1

4.2%

26

100%

24

100%

Total

Jun 12Aug 12

•T  ransaction mix among financial and strategic buyers remained fairly consistent over the last three months versus the comparison period as financial buyers accounted for approximately 35% of total deal volume

Packaging Transaction Detail Jun 11– Aug 11

% of Total

PMCF Key Takeaways & Analysis

Transactions by Process Type Jun 11 – Aug 11

Food & Beverage Industrial Consumer Construction Medical Automotive Transportation Electronics Total

Jun 11Aug 11

•R  esin and color and compounding deals, along with specialty plastic processors experienced the largest increase as a percentage of total deals, accounting for 40% of transaction volume from June 2012 through August 2012 versus 26% during the same period last year •D  istressed deal activity was non-existent during June 2012 through August 2012, a similar trend to the same period a year earlier which contained only a single distressed transaction

Distressed Transaction Detail

Distressed

Jun 11– Aug 11

% of Total

Jun 12– Aug 12

% of Total

1

1.2%

0

0.0%

Source: P&M Corporate Finance

plastics.pmcf.com

Suite 120 26300 Northwestern Highway Southfield, MI 48076

TRANSACTION UPDATE

PPCF COMPLETES SALE OF PLASTIC SHEET EXTRUDER P&M Corporate Finance (“PMCF”) is pleased to announce that it served as exclusive financial advisor to Bloomer Plastics, Inc. (“Bloomer”), a privately held business in Bloomer, Wisconsin, in its successful sale to private equity investor Huron Capital Partners LLC (“Huron”). The transaction, and Huron's partnership with Bloomer's management, will provide significant capital to fund Bloomer's ambitious national expansion plans and broaden its product development and customer service capabilities. Bloomer's management team and shareholders selected PMCF's Plastics & Packaging Group, led by John Hart, to conduct an international sale process for the Company. The Company's goals were to secure a partner to support Bloomer's growth strategy including adding capacity and expanding into new markets and products. PMCF facilitated discussions and negotiations with a range of potential strategic and financial parties in a process that ultimately resulted in a successful transaction with Huron, which closed June 8, 2012.

FOR MORE INFORMATION, VISIT WWW.PMCF.COM

JOHN D. HART 248.223.3468 [email protected]

MATTHEW G. JAMISON 248.223.3368 [email protected]

RYAN R. SHUCHMAN 248.603.5372 [email protected]

DAN M. RATLIFF [email protected] plastics.pmcf.com