米拉龙成为不受关注的希伦布兰德多元化战略的一部分

Hillenbrand continues to diversify into plastics-related process machinery, striking a deal to acquire Milacron, a leading player in plastic molding equipment.Operational synergies could be limited with Hillenbrand\'s more upstream-focused equipment business, but Milacron is a good business in its own right and a good long-term opportunity for Hillenbrand.Milacron shareholders are getting good value on a risk-weighted basis, and Hillenbrand will need to hit its synergy/cost targets to drive the near-term value creation.All’s well that ends well, I suppose, andHillenbrand’s (HI) $18 cash-and-share offer forMilacron(MCRN) gives those shareholders a decent exit on what has been a frustratingly volatile business, with some potential upside if they choose to stick with Hillenbrand for the long term. For Hillenbrand, Milacron is another big step in its diversification program; one that makes some sense, but isn’t coming cheap.I had thought for some time that Milacron could be a buyout target, but I was expecting either a private equity bid or a bid from a larger industrial conglomerate. I suppose Hillenbrand qualifies, though the two companies are about the same size in terms of their industrial-based revenue.Hillenbrand is offering a mix of cash ($11.80 per Milacron share) and equity (0.1612 shares of Hillenbrand for every Milacron share) in a deal that was worth a little more than $18 at the time of the announcement and is still worth more than $17.50 after the post-deal decline in Hillenbrand’s share price. Milacron shares had been moving up from recent lows in the $11’s into the $13’s and $14s, but the Hillenbrand is still a pretty solid premium to recent trailing averages, though Milacron shareholders need only look back about nine months to see a higher trading price for the shares.All told, I think this is a fair deal for both parties. I thought Milacron’s standalone value was in the mid-to-high teens, and Hillenbrand should be able to wring some modest cost synergies out of the deal. While Milacron had good long-term exposure to trends like automobile lightweighting (replacing metal components with plastics) and a shift toward plastics in areas like medical technology, the reality is that the business can be quite volatile in the short term, with a double-digit revenue decline in the first quarter of 2019 and a high single-digit decline in constant-currency orders.Said differently, Milacron could have perhaps done better on its own over the long term, but the outlook over the next 12 – 24 months is shaky and the stock was under-followed, so appreciation could well have lagged the eventual improvement/growth of the business.At the most basic level, I think Hillenbrand is paying an okay price for an arguably underrated asset in a very cyclical business.Milacron is a strong player in injection molding equipment and consumables like hot runners, with top 5 share in equipment (with just 4% share) and top-2 share behindYudoin hot runners with around 15% share. Management has been pruning the business, exiting injection molding in Europe and recently classifying its blow molding business as a discontinued operation, but also placing increasing emphasis on innovation, including new molding technologies and new products for large applications in markets like autos (equipment that can produce an entire dashboard in one go, for instance).I’m not completely sold on the operational synergy story that Hillenbrand management is trying to tell around this deal.Since spinning out fromHill-Rom(HRC) over a decade ago, Hillenbrand has been taking the cash generated by the Batesville casket business and reinvesting it in a diversified equipment business focused on process equipment like compounders, extruders, feeders, screeners, valves, pumps, and so on for end-markets like plastics, chemicals, mining, food/beverage, and water/wastewater.About half of the company’s revenue comes from the Coperion business, which sells compounders, extruders, feeders, and material handling equipment for the plastics and polyolefin industries. Milacron will give Hillenbrand a significantly enhanced position in downstream plastics operations (molding), but I don’t see all that much synergy between equipment used to create plastic pellets and equipment used to process those pellets into finished goods, other than giving the company a continuum of exposure to a growing market opportunity.To be clear, there doesn’t need to be operational synergy for this deal to work. I believe Milacron is a high-quality business, and as I said, I expected to see it bought out eventually. I just hope that Hillenbrand really isn’t counting on meaningful operating synergy here outside of areas like overall sourcing/logistics opportunities and maybe some manufacturing consolidation.Hillenbrand deserves its own separate write-up at some point, and I can’t really do the business justice without creating an excessively long article. I like the company’s process equipment business, and I believe it is well-placed to leverage a solid pipeline of plastics facility construction over the next few years (there are several large plants in various stages of construction around the world, with completion dates between 2019 and 2021 and beyond). I also like the Milacron deal on balance, even though I’d expected the company to focus more on acquisition opportunities in food/beverage.For Milacron, this is a good end to what has been a challenging story. While I still like the underlying drivers of the business (increasing use of plastic in place of metal and other materials, consolidation, innovation-driven share growth, et al), the business has been quite cyclical and I think the Hillenbrand transaction offers investors a decent exit price with the option to participate in Hillenbrand if they choose.I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.