5 Notable M&A stories of 2022 (so far)

If nothing else, 2022 has been a year of transition.

Industrywide, companies headed into 2022 with optimism, knowing that 2021 offered a return to normal and the new year could provide space to build on those successes.

And while there are pressures weighing on businesses across the rubber industry—war in Ukraine, inflation, supply chain snarls and labor shortages—there has been growth. Mergers and acquisitions have continued to be an important part of growth strategies for companies large and small.

Here's a look at some of the most notable M&A moves of the year so far.

Yokohama Rubber Co. Ltd. in March reached an agreement with Trelleborg A.B. for the purchase of its Trelleborg Wheel Systems business for $2.3 billion in a cash and debt-free deal.

Once finalized, the acquisition could more than double the size of the Japan-based tire maker's off-highway tire business, significantly bolstering its ag market presence. It's an arena that Yokohama believes could offer a critical path for growth in the years ahead.

TWS, in 2021, posted $1.17 billion in sales. Yokohama's off-highway tire business, meanwhile, accounted for $977 million in sales last year.

For Trelleborg, the deal promises to be a valuable one because it allows the Swedish rubber products maker to focus growth plans on more lucrative markets—particularly medical and sealing. And coming off one of its best years ever in 2021, the company will have the capital to grow quickly, especially through acquisition.

Tenneco Inc. is positioned to go private, having agreed to a $7.1 billion acquisition by private equity firm Apollo Global Management.

CEO Brian Kessler has signaled that he will step down once the acquisition is finalized. Apollo CEO Jim Voss is positioned to lead the company.

Rumors of the marriage between Tenneco and Apollo date back to January 2020, when Crain's Detroit Business reported that Apollo had offered $4.3 billion for the auto supplier. It was another mile marker on the rocky road Tenneco traveled as it worked to find its footing following the $5.4 billion acquisition of Federal-Mogul L.L.C. in 2014.

Shortly after the Federal-Mogul acquisition, Tenneco disclosed plans to split into two publicly traded companies—a $6.4 billion replacement automotive parts company and a $10.7 billion powertrain technology firm.

A year later, Tenneco dubbed the spin-off company Driv Inc., saying it would operate as a catalog of well-known brand names, five of which were more than a century old. The product lines would include Monroe, Champion, Oehlins, Moog, Walker, Fel-Pro, Wagner, Ferodo, Thrush, National, Sealed Power and Axios.

The aim was to spin off the company in 2020, but plans were delayed due to unfavorable market conditions.

Tenneco, which operates the Clevite Elastomers business, is the 12th largest automotive supplier worldwide, according to Automotive News data. The company reported total global OEM parts sales of more than $15.04 billion in 2021.

Parker-Hannifin Corp., in September last year, got approval from Meggitt P.L.C. shareholders, clearing the first of many hurdles for its $8.7 billion acquisition of the United Kingdom-based aerospace and defense supplier.

Once finalized, the deal will be Parker's largest ever.

Nine months after receiving shareholders' approval, Mayfield Heights, Ohio-based Parker got another go-ahead for the deal, this time earning the approval of the the U.K. Secretary of State for Business, Energy and Industrial Strategy. Parker received word June 28 that the government was "minded" to accept measures to address competition and national security concerns.

The June approval followed the April clearance by the European Commission.

And on July 21, the U.K. gave Parker the official "go-ahead" for its acquisition of Meggit.

Business Secretary Kwasi Kwarteng said approval of the deal follows review of advice from the U.K. Ministry of Defence and the Competition and Markets Authority.

For its part, Parker has agreed to divest its aircraft wheel and brake division, a move required to close on the Meggitt deal. Bloomfield, Conn-based Kaman Corp. is poised to pay $440 million for the unit.

Meggitt, headquartered in Coventry, England, had sales of about $2.3 billion in 2020, and it has more than 9,000 employees.

Mayfield-based Parker-Hannifin, a motion and control technologies manufacturer, serves a range of end markets including aerospace, electronics, health care, off-road machinery, oil and gas, and transportation. It recently took the No. 1 spot on Rubber News' inaugural ranking of global hose manufacturers.

When Jim Hill, CEO of Continental A.G.'s ContiTech North American operations, served as the keynote speaker for the biennial Hose & Belt Manufacturers Conference, he hinted that ContiTech was positioning itself for growth.

"I think you will start to see one or two announcements in the next six months that will show us actually building some facilities here to onshore some products that we make in other parts of the world today," he said. "It is well underway for us to be in the market for the market."

He wasn't kidding.

In the three months since the conference, Continental has disclosed some significant investments in the North American region and made some acquisitions that help it establish a strong local presence in the region and around the globe.

Most notably, ContiTech made a move to strengthen its presence in the agricultural belting space with the proposed acquisition of WCCO Belting, a 68-year-old, family-owned company that has built a global reputation.

Terms of the deal were not disclosed.

Announcement of the acquisition came on the heels of a decision to grow hose production in North America. ContiTech recently disclosed plans for the construction of a $40 million hydraulic hose plant in San Luis Potosi, Mexico.

Meanwhile, Continental made another move in the belting space, reaching an offer to acquire mining belt supplier Gallivare, Sweden-based NorrVulk A.B.

Terms of that acquisition, subject to approval by antitrust authorities, were not disclosed.

As the company realigns and right-sizes parts of its operations for optimal growth across a range of industries, there's a chance that more acquisitions could be on the horizon.

Celanese Corp., already a global leader in polymer resins, made a declarative statement of that position in February with a monster offer: $11 billion in cash for the bulk of DuPont's Mobility & Materials business.

It's a purchase price that represents an enterprise value multiple of about 14 times the unit's 2021 operating EBITDA.

"For nearly a decade, we have implemented, enhanced, and increasingly extended the engineered materials (EM) commercial model to generate shareholder value," Celanese Chairman and CEO Lori Ryerkerk said in a Feb. 18 news release. The DuPont business "will be a high-quality addition to EM and will unlock significant opportunities to generate further customer and shareholder value."

The pending acquisition would bring the Zytel and Rynite nylon, Crastin polybutylene terephthalate, and Vamac and Hytrel elastomers, into the Celanese fold.

Once finalized, Celanese would acquire a business that records $3.5 billion in annual sales.

The deal, a major one for the materials space, is far from the only major deal in the polymers arena, according to Plastics News.