By Bill Bregar, UT Akron Bureau
Munich, Germany-The world's largest plastics equipment maker, Mannesmann Plastics Machinery GmbH, will be sold to Chicago investment group Madison Capital Partners and MPM management under an agreement announced 30 May.
Terms were not disclosed. The agreement was signed 26 May and is scheduled to close within 45 days.
It will be a monster purchase for Madison Capital - and according to Larry Gies, president and chief executive officer, comes after a 12-year search for an injection moulding machinery maker to buy.
"We have had discussions with five separate [companies] since 1994," Gies said in a written response to questions from Urethanes Technology's sister publication Plastics News. That was the year Madison Capital was founded. In each case, he said, Madison "was not satisfied with the depth and breadth of people, technology and products."
Buying MPM will make Madison Capital and the 40-year-old Gies soar to the ultimate top spot in plastics machinery, with ownership of some of the industry's biggest brand names. MPM nameplates are reaction process equipment for polyurethanes by Krauss-Maffei, injection moulding machines by Krauss-Maffei, Demag Plastics Group and Netstal, and Berstorff compounding extruders.
MPM generated 2005 sales of Euros1260 million ($1600 million). That total included a small maker of injection presses, Billion SA of Bellignat, France, which MPM is in the process of selling. MPM spokesman Jörg Hettmann said the Billion sale should close by the end of June.
MPM employs about 6000 and has factories in Germany, Switzerland, the United States, China and India.
Gies quickly laid to rest one perennial question about Mannesmann Plastics Machinery - would a new ownership split it apart and sell off individual companies?
"Madison will not break up MPM. We have made this commitment to the management, employees and customers of MPM. We support management's multibrand strategy. Madison and management have made a commitment that the brands will stay together and work together, as this provides the best service, support and technology for our customers," Gies said.
MPM's strategy has been to keep the machinery brands separate while sharing some resources and collectively buying some components, office supplies and other materials.
Madison Capital is buying MPM from big New York buyout specialist Kohlberg Kravis Roberts & Co. Although the same rules of investment and economics apply to both, Madison Capital could hardly be more different than KKR - Madison is a low-key outfit run by Gies and a handful of others out of a bare-bones office in Chicago.
Madison said it is "committed to the long-term growth of MPM."
Hettmann, spokesman for Munich-based MPM, said it is a straight transaction and not part of an auction. Financing is through Munich-based HVB Group, one of Europe's largest banks. According to Madison Capital, HVB is the current lender to MPM and its holding company.
About half of MPM's total sales come from a single unit, Krauss-Maffei Kunststofftechnik GmbH. KM's managing board chairman, Josef Märtl, confirmed that some managers have had ownership stakes under KKR. "And what they've offered us is ownership, too," he said about Madison.
Management is investing money in the deal, Märtl said. Asked about the level of ownership, he declined to be specific.
But he said: "First of all, it's a management team that is behind this deal, and which is investing money." Märtl called Madison Capital officials "really knowledgeable people in the plastics industry."
Madison Capital already owns two plastics machinery companies: Brown Machine llc, which makes thermoforming equipment in Beaverton, Michigan; and Fremont, Ohio-based plastics machinery remanufacturer Epco Machinery llc. Madison also owns gasket extruders Holm Industries Inc. of Scottsburg, Ind., and Industrie Ilpea SpA in Malgesso, Italy.
The firm has bought and sold several plastics processors over the years, including blow moulder Borse Industries LP of Willowbrook, Illinois; injection moulder Plastron Industries Inc. of Bensenville, Illinois; and Pawnee Rotational Molding Co. of Maple Plain, Minnesota.
If the deal closes, Kohlberg Kravis Roberts will have owned the plastics machinery goliath for four years. KKR bought MPM in 2002 from Siemens AG, which retained a 19 percent stake.
This is not the first time KKR has tried to sell MPM. In early 2005, news reports said KKR had hired Goldman Sachs to handle an auction for MPM. The reports estimated the asking price at Euros 700 million ($912 million).
Madison Capital got close to buying a maker of injection moulding machines before, but failed to buy Battenfeld GmbH's injection press business in late 1999 and early 2000. In announcements just two months apart, Madison said it was buying Battenfeld from SMS AG of Düsseldorf, Germany, but then SMS said it had killed the deal.