Yes, it is sexy. A bit mature, but still has it, maybe even a newfound “hotness.”
We're talking about the rubber industry, of course. That is, if you're a private investor group, an automotive component maker or a supplier to rubber processors looking to grow via acquisition.
Pre-dating the recession by a few years, rubber industry companies were treated as wallflowers by the investment community. Heavily tied to the automotive market, many makers of components or suppliers to them were stigmatized with the labels “mature,” “low growth” and “debt-ridden.”
The smart money stayed away from most rubber industry companies. And some of the big players in the acquisition game—Federal-Mogul, for example—suffered from excessive growth when the downturn came.
The recession killed off some of the weaker sisters in the business and caused a number of mergers, acquisitions and reorganizations via bankruptcy court as companies struggled to escape crushing debt.
What is there today? The survivors—with a balance sheet in order and better prospects—seem to be looking awfully pretty to the private equity money and some of the larger auto component makers and industry suppliers. The result has been a rising number of purchases, with more to come.
Henniges Automotive Holdings Inc. is the latest example. One private equity company, Wynnchurch Capital Partners, cashed out its investment, selling the rubber parts maker to Littlejohn & Co. L.L.C.
ContiTech, Freudenberg-NOK, Fenner, Parker-Hannifin are among the firms that have been active lately in acquisitions. On the supply side, Lanxess, Omnova, Hexpol and now executives of Preferred Compounding and Wingate Partners private equity firm have been in the game.
'Tis the season of the deal.