POLYETHYLENE FILM
BPI makes another major acquisition / Low & Bonar film business adds further 40,000 t/y of capacity / Britton Group sold to US firm / Future of its plastics activities unclear
Further corporate change has taken place in the polyethylene film sector, with Europe's largest group, British Polythene Industries (BPI, 96 Port Glasgow Road, GB-Greenock PA15 2RP) acquiring the remaining film extrusion operations of Low & Bonar PLC (Bonar House, Faraday Street, GB-Dundee DD1 9JA), while Britton Group (1 Castle Lane, GB-London SW1E 6DN) has gone to a US company.
The Low & Bonar businesses acquired by BPI involve two operations based at Leominster, in the UK and Zele in Belgium. The deal involves a cash consideration of GBP 7.7m which will be financed by borrowings. Turnover for the year ended 30/11/96 was GBP 38.5m with an operating profit of GBP 1.4m. The reduction in stretch wrap margins will result in a small operating profits for this financial year on sales of GBP 40m.
The companies have a combined volume of 40,000 t/y of film product and their addition to the BPI group will push its total polyethylene requirement close to 400,000 t/y. The UK plant, to be renamed Minster Polythene Films, focuses on stretch wrap and shrink wrap, while in Belgium, in addition to stretch wrap manufacture, it also prints film for form, fill, seal applications and pallet protection. The businesses have a key position in the agricultural stretch wrap market so will further strengthen BPI's already dominant position in these markets in the UK as well consolidate its position in Europe following its acquisition earlier this year of Wavin's Dutch and Belgian film operations (PIE 5).
Following the unsuccessful attempt by a US group to acquire Britton Group recently (see Plasteurope.com 20), another company, ACX Technologies Inc (16000 Table Mountain Parkway, Golden, CO 80403 / USA) has now put in a USD 335m bid for the polyethylene film and cartons group, which has been accepted by the board. The bid is based on a cash offer of GBP 1.40/share together with the assumption of debt and other transaction costs, which brings the total deal to around USD 420m.
As with the hostile GBP 1.20/share offer from Caraustar Industries (3100 Washington Street, PO Box 115, Austell, GA 30001 / USA), ACX's interest in Britton is primarily for its US cartons division, Universal Packaging Corporation. ACX is a packaging and ceramics products company and the Britton Group companies will form part of its Graphics Packaging Corporation, which is specialised in producing folding cartons, flexible packaging products and labels. With 1996 sales of USD 347m, the Britton deal will double the group's packaging business.
Within Europe, Britton Group is a leading supplier of polyethylene film and converted products. The company was created in the early 1990s by two directors with the express aim of building a leading packaging group through acquisition. Today it has four extrusion companies in the UK with a combined total capacity of around 80,000 t/y together with several converting and printing operations. It is not yet clear what ACX's plans for the European film operations will be. Britton Group's 1996 sales were GBP 221.7m with profit before tax of GBP 20.4m, but earnings were down 30% for the first half of 1997.
PIE Comment
Another interesting acquisition from BPI which is clearly taking an aggressive expansionist strategy to improve margins for its hard pressed stretch wrap business. As has been well reported, the stretch film business is murderously competitive at the moment, with everyone complaining of reduced margins, despite the fact that business volumes are generally up this year, although the situation for UK producers is further compounded by the strength of the pound. We expect further corporate changes in this sector as the leading players attempt to find a market size and position to achieve satisfactory profits. For Low & Bonar, the move marks a clear strategy to withdraw from packaging following the earlier sale of its Bonar Teich Flexibles business (see Plasteurope.com 20).
The Low & Bonar businesses acquired by BPI involve two operations based at Leominster, in the UK and Zele in Belgium. The deal involves a cash consideration of GBP 7.7m which will be financed by borrowings. Turnover for the year ended 30/11/96 was GBP 38.5m with an operating profit of GBP 1.4m. The reduction in stretch wrap margins will result in a small operating profits for this financial year on sales of GBP 40m.
The companies have a combined volume of 40,000 t/y of film product and their addition to the BPI group will push its total polyethylene requirement close to 400,000 t/y. The UK plant, to be renamed Minster Polythene Films, focuses on stretch wrap and shrink wrap, while in Belgium, in addition to stretch wrap manufacture, it also prints film for form, fill, seal applications and pallet protection. The businesses have a key position in the agricultural stretch wrap market so will further strengthen BPI's already dominant position in these markets in the UK as well consolidate its position in Europe following its acquisition earlier this year of Wavin's Dutch and Belgian film operations (PIE 5).
Following the unsuccessful attempt by a US group to acquire Britton Group recently (see Plasteurope.com 20), another company, ACX Technologies Inc (16000 Table Mountain Parkway, Golden, CO 80403 / USA) has now put in a USD 335m bid for the polyethylene film and cartons group, which has been accepted by the board. The bid is based on a cash offer of GBP 1.40/share together with the assumption of debt and other transaction costs, which brings the total deal to around USD 420m.
As with the hostile GBP 1.20/share offer from Caraustar Industries (3100 Washington Street, PO Box 115, Austell, GA 30001 / USA), ACX's interest in Britton is primarily for its US cartons division, Universal Packaging Corporation. ACX is a packaging and ceramics products company and the Britton Group companies will form part of its Graphics Packaging Corporation, which is specialised in producing folding cartons, flexible packaging products and labels. With 1996 sales of USD 347m, the Britton deal will double the group's packaging business.
Within Europe, Britton Group is a leading supplier of polyethylene film and converted products. The company was created in the early 1990s by two directors with the express aim of building a leading packaging group through acquisition. Today it has four extrusion companies in the UK with a combined total capacity of around 80,000 t/y together with several converting and printing operations. It is not yet clear what ACX's plans for the European film operations will be. Britton Group's 1996 sales were GBP 221.7m with profit before tax of GBP 20.4m, but earnings were down 30% for the first half of 1997.
PIE Comment
Another interesting acquisition from BPI which is clearly taking an aggressive expansionist strategy to improve margins for its hard pressed stretch wrap business. As has been well reported, the stretch film business is murderously competitive at the moment, with everyone complaining of reduced margins, despite the fact that business volumes are generally up this year, although the situation for UK producers is further compounded by the strength of the pound. We expect further corporate changes in this sector as the leading players attempt to find a market size and position to achieve satisfactory profits. For Low & Bonar, the move marks a clear strategy to withdraw from packaging following the earlier sale of its Bonar Teich Flexibles business (see Plasteurope.com 20).
31.12.1997 Plasteurope.com [18923]
Published on 31.12.1997