SK Capital acquires majority stake in materials manufacturer Techmer PM
SK Capital has taken another plastics-related move, this time acquiring a majority stake in materials company Techmer PM LLC for an undisclosed price.
Techmer, based in Clinton, Tennessee, manufactures technical compounds and color and additive concentrates for plastics and fibers. SK Capital is a New York-based investment firm.
SK buys the majority stake from Techmer CEO and Chairman John Manuck, as well as business partners Rehrig Pacific and Tokyo Ink. Manuck, who founded Techmer in 1981, will retain a large stake.
In a July 20 telephone interview, Manuck said the agreement with SK will allow Techmer to continue to grow, especially in international markets.
“It’s been a long time,” he said. “A lot of people have spent their entire career with us and I want us to be able to grow. If we can’t do that, it’s an empty promise.”
Techmer serves customers in global markets including agriculture, automotive, aerospace, building & construction, consumer products, medical and rigid packaging, as well as numerous OEMs. The company works with major brand owners as well as organizations such as Oak Ridge National Laboratory and NASA.
SK manages a portfolio of businesses focused on specialty materials, chemicals and pharmaceuticals. The company has now made four plastics-related investments in recent years, including the purchase of the Performance Products & Solutions unit of PolyOne Corp. for $775 million at the end of 2019. This Avon Lake, Ohio-based company, a major PVC manufacturer, now operates as Geon Performance Solutions. PolyOne is now called Avient.
Changes in the plastics industry over the years also made the deal necessary, according to Manuck, who began his career in 1969 at a resin plant operated by Monsanto Inc. in Massachusetts.
“I was a helmet guy,” he said. “Then in the 70s and 80s, plastics was like software – you had double-digit growth in a good year and single-digit growth in a recession.”
As the industry matured in the 1990s, Manuck said, consolidation took place, putting more emphasis on big brands made by global companies that needed global production.
“They need that performance from a supplier, and we realized we couldn’t do that in a year or two without help,” he added.
“It’s all about the future – that’s why we made [the deal with SK]”, Manuck said. “We’ve had a lot of offers over the years. It was the right time with the right partner.”
Techmer’s management team, including Manuck and Chairman Ryan Howley, will remain in place. Howley said on July 20 that the “whole idea” behind the SK deal is “a global growth strategy.”
“We want to expand into other parts of the world,” Howley said. “It’s hard to do this without capital.” Techmer currently operates six factories in the United States and one in Mexico, which opened in late 2017.
“We will use the Techmer name and grow with it,” Howley added.
In a July 20 telephone interview, SK chief executive Jon Borell said the Techmer investment “is very much in line with our overall strategy of investing in market-leading companies and providing them with the resources they need to develop”.
“We saw this opportunity in John Manuck and Techmer,” he added.
SK General Manager Mario Toukan added on July 20 that his company “views Techmer as a leader” in masterbatch concentrate production and technology.
“We focused on their expertise and their ability to provide solutions to their customers,” he said. “We can help them create a toolkit to grow with OEMs and their global customer base.”
Looking ahead, Borell added, Techmer could grow organically or through acquisition. Techmer and SK began talking about a potential deal in mid-2018. Completion of the deal has been delayed by the COVID-19 pandemic.
“COVID set things back a few months,” Howley said. SK officials had visited Techmer sites before the pandemic hit, he added, but “we had to catch our breath and make sure the economy was okay.”
SK’s Borell added that the two companies were in “advanced discussions” earlier this year, but Techmer “wanted to make sure their people and their business were taken care of, which was the right thing to do.”
Techmer has performed well during the pandemic, Howley said. Although the company’s automotive business is down, he added that its top-selling material is now a polypropylene-based concentrate used to improve the filtration of medical face masks.
Techmer’s US plants are in Clinton; Rancho Dominguez, California; Wichita, Kansas; Dalton, Georgia; New Castle, Delaware; and Batavia, Illinois. Its Mexican factory is in Querétaro. The company employs over 600 people worldwide.
Since 2014, Techmer has been appointed to the Plastics News The five-time Best Workplaces list, most recent in 2020. The company is one of North America’s 30 largest concentrate manufacturers and manufacturers, according to Plastics News The data.
SK’s portfolio of companies has annual sales of approximately $9 billion and employs more than 10,000 people worldwide. In addition to Geon, SK’s plastics-related holdings include nylon 6/6 resin maker and blender Ascend Performance Materials of Houston and additives supplier SI group of Schenectady, NY.
Kirkland & Ellis LLP acted as legal counsel to SK Capital in connection with the Techmer agreement. Committed debt financing was provided by Cerberus Business Finance LLC. Pillsbury Winthrop Shaw LLP acted as legal counsel to Techmer PM.