REID ACQUIRES FOURTH FIRM, EYES TWO MORE

Comments Email Print

Acquisition-minded B. Joseph Rokus wants more.

His family-owned Reid Plastics Inc. purchased Stewart/Walker Co. for about $50 million in cash and debt in mid-December in its fourth deal in 22 months. Two small Eastern blow molders may be next.

Reid's multiple operations now generate annual sales of more than $200 million, a dramatic jump from $40 million two years ago. Reid employs about 1,100 and claims to be the country's largest producer of plastic water bottles of 1 gallon or larger.

``Our goal is $500 million in revenues by the year 2000,'' through acquisitions and growth in core markets, Rokus said in a news release.

Generally, Reid retains managers of acquired competitors.

The firm said it has 65 percent of the U.S. market for plastic cooler bottles and 80 percent of the Canadian market. Reid was founded in 1944 and claims to have developed the first 5-gallon plastic water bottles in 1972.

Rokus, president of the Arcadia, Calif.-based company, said he plans ``to consolidate the industry, realize synergies and increase earnings.''

Stewart/Walker, which fits his profile, employs 270 and has sales of about $57 million, serving the food, dairy, noncarbonated beverage, household and industrial chemical and storage container markets.

Formed in 1966, La Palma, Calif.-based Stewart/Walker blow molds high density polyethylene, stretch blow molds PET and injection molds HDPE for dairy cases on 43 manufacturing lines.

The firm operates U.S. plants in Tracy, Calif.; Phoenix; Albuquerque; Seattle; and Vancouver, Wash. Stewart/Walker has a distribution center in La Palma and, until an April shutdown, made products there also.

Canadian facilities in Vancouver, British Columbia; Calgary, Alberta; and Winnipeg, Manitoba, make a variety of dairy bottles in addition to injection molding dairy cases. Employees owned about 60 percent of Stewart/Walker.

Reid acquired Plastic Containers Inc. in Demopolis, Ala., in November from Atlantis Plastics Inc. Plastic Containers employed 95, operated 17 machines and had 1994 sales of less than $25 million from blow molding HDPE for dairy, water, juice and industrial containers.

Reid purchased Crystal Clear Inc. in May 1995. The molder of 5-gallon, 3-gallon and medical bottles employed about 100 and generated 1994 sales of $4.5 million from operations in Hillside, N.J., and a California site, subsequently closed.

Reid and minority investor ING Equity Partners of New York acquired Propak-California Corp. in March 1995. The firm made industrial and household chemical containers, smaller sizes of water, milk, juice and food containers, and personal-care and pharmaceutical bottles. Based in City of Industry, Calif., Propak-California employed 600, operated 80 machines in six plants and generated 1994 sales of $60 million.

In July, Reid began bottle production in East Hempfield Township, Pa., near Lancaster, in a noncaptive arrangement. Reid molds containers in a 15,000-square-foot section of Cloister Spring Water Co.'s new 100,000-square-foot complex. Reid employs 25 there and makes 25 million bottles annually for Cloister, and an undisclosed volume for other customers. Cloister's annual sales exceed $30 million.

Reid works with the Los Angeles-based investment banking firm of Houlihan Lokey Howard & Zukin to arrange leveraged financing and negotiate acquisitions.

Senior bank debt funded most of the transactions, and additional lines of credit meet working capital needs, according to John Mavredakis, managing director of Houlihan Lokey. For the Stewart/Walker transaction, Houlihan Lokey arranged a $122.5 million financing package that includes a credit line for future acquisitions, probably for Reid's pending efforts to acquire two small Eastern plastic bottle manufacturers.

Recognizing an unusual combination, Mavredakis notes that Reid Plastics has grown ``while maintaining the company's family ownership and culture.''