Low & Bonar (GB-Dundee DD1 9JA; www.lowandbonar.com), a manufacturer of flexible floor coverings, manmade fibres and technical fabrics, has not had much joy from its plastics business over the past few years, despite a recent improvement in the figures – see PIE 05, 2005. Therefore, the board of management has decided to sell the entire division. Buyer of one of the biggest rotational moulders in Europe with 12 production plants is Promens, a subsidiary of private equity company Atorka (IS-105 Reykjavik; www.atorka.net). The purchase price is GBP 25.75m (EUR 37.2m). Shareholders of both companies still have to approve the move.

The Icelandic investor is already the largest shareholder of Low & Bonar since acquiring additional shares in April of this year from the previous majority shareholder, Schroder Investments, thereby lifting its stake to 21.2%. From Atorka´s point of view, the transaction makes plenty of sense. Also through its subsidiary Promens, it already has another rotational moulder (although not quite as large) in its portfolio, Saeplast (IS-620 Dalvik; www.saeplast.is).

Low & Bonar´s plastics business, which trades as Bonar Plastics, has been struggling with low margins for several years and especially in southeastern Europe is not performing well – see PIE 01, 2005. With a workforce of around 1,000, it had 2004 sales of GBP 59.2m and an operating result of GBP 1.2m in fiscal 2003/2004. In the first half of 2004 /2005 (31 May), the plastics business looked a little better. Sales totalled GBP 32.3m, and the operating result was GBP 0.6m. As CEO Paul Forman explained, this was all the more laudable because the division had to swallow additional raw material costs of GBP 1m. The group´s total sales amounted to GBP 110.5m (GBP 94.7m), while the operating result dropped to GBP 4.2m (GBP 6.2m).

After divesting its plastics operations, Low & Bonar will concentrate on its two core areas of business and intends to make further acquisitions. In mid-July, the company announced the takeover of Xirion (B-8400 Oostende; www.xirion.be), a leading global manufacturer of monofilament for artificial turf. Purchase price was EUR 13.6m in cash, plus the assumption of EUR 2.9m in debt. In the first five months of 2005, Xirion posted sales of some EUR 4.5m. Production at the Chinese site of Yihua Bonar is being expanded, with full capacity to be reached the end of 2006. Through this project, Low & Bonar aims to become the world´s biggest producer of artificial turf.

• e-Service:Low & Bonar report first half 2004/2005 (PDF) as PDF document (821 KB)