Pactiv APET expansion
expected to add a competitive specialty material to its line of
US-based Pactiv's planned acquisition of Winkler Forming is expected to add a competitive specialty material to its line of food containers.
Winkler, based in Calififornia, thermoforms and extrudes plastic sheet from amorphous polyethylene terephthalate (APET), a temperature-resistant, clear material known to maintain its toughness and flexibility during long-distance shipping.APET, primarily used to store bakery and confectionery items and fresh-cut produce, competes with two types of polystyrene packaging.
"At one time, there must have been 70 different companies using APET," said William McConnell, a thermoforming consultant with Fort Worth, Texas-based McConnell Co. "But Winkler has been a good salesman for the material. Their marketing, especially to grocery stores, puts them ahead of a lot of the others."Pactiv already makes a variety of food-packaging containers, but none from APET, chairman and CEO Richard Wambold said in a May 20 conference call with analysts.
Sales of APET containers are growing at a 6 per cent compound annual rate - faster than polystyrene containers and some other materials, Wambold said.
Pactiv will use its existing salesforce - 30 times the size of Winkler's - to boost the business and mesh products with its food-services and food-packaging unit, he said.
"Amorphous PET is one of the fastest-growing segments in the food-services industry," Wambold said. "It fills a void for us and helps us effectively serve a market rather than just build a factory or (internal) sales over time."
Pactiv will pay $72.5 million (€77.7m) to buy privately held Winkler - about seven times earnings before interest, taxes, depreciation and amortisation. The deal is scheduled to close by late summer.
"It seems like a good fit," said Lehman Bros. analyst Ghansham Panjabi, who follows Pactiv. "Products need to be held in a cold environment when shipped to supermarkets, and (APET) seems to keep the packaging from breaking down. Pactiv is trying to capitalise on the material's growth."
Winkler, with plants in Santa Fe Springs and west suburban Bridgeview, has about 220 employees making both containers and thermoform tooling.
It has enough manufacturing capacity to boost its production by 40 per cent, and Pactiv hopes to capitalise on that potential with an aggressive distribution system, Wambold said.
The California company - which had sales of about $50 million in the fiscal year ended March 31, according to a Pactiv spokeswoman - has had a colourful past since its founding in 1989 by brothers Paul and Morris Winkler and several others. It went through several ownership changes before being purchased in 1993 by PMC Global, a California-based conglomerate with holdings in chemical and electronics companies.
PMC tried to sell Winkler in 1997, at one point generating interest from Pactiv competitor Ivex Packaging, said Lloyd Greif, president and CEO of Los Angeles investment banking firm Greif & Co., which helped Winkler negotiate the deal with Pactiv.
When Ivex and Winkler could not reach an agreement, Ivex bought Ultra Pac, another maker of APET containers, in early 1998.
PMC decided to keep the company - a small piece of its business - as its value grew, Mr. Greif said. Pactiv came in with a pre-emptive bid at a fair price when the business was put back on the market this year, he said.
"This is the jewel in the APET crown," Mr. Greif said. "More than half of Winkler's sales come from their own proprietary designs. And APET is the compound of the future."Paul Winkler left the company in 1998 to open a rival thermoforming company, Paul Winkler Plastics of Buena Park, California. PMC and Winkler Forming sued Paul Winkler in a trade-secret case that was settled last year.
The lawsuit had no impact on the sale of Winkler to Pactiv, the spokeswoman said. "It's ancient history,"