World Class Film Corp. plans to enter new barrier film markets by purchasing an Outlook Group Corp. subsidiary.
World Class of Yonkers, N.Y., signed a letter of intent to acquire Barrier Films Corp. for undisclosed terms. Outlook Group bought Barrier Films of Sparks, Nev., about two years ago to diversify its packaging and graphics business, but last year it decided to retrench to its core businesses.
Outlook Group President Joe Baksha said his firm and World Class have been negotiating the deal for a few months. Outlook Group of Menasha, Wis., hopes to complete it by mid-March. Barrier makes multilayer film for modified atmosphere packaging for produce, meat and cheese markets.
Ronnie Shemesh, chief financial officer of World Class, said his firm plans to invest about $10 million over the next year to expand Barrier Films' capacity and product lines. Barrier Films now makes three- and five-layer constructions. World Class wants to install more five-layer capacity and to build a seven-layer film line at Sparks. Shemesh said his firm has not chosen equipment suppliers.
``Barrier's film production is more sophisticated and will allow us to expand into new markets,'' Shemesh said in a telephone interview.
World Class extrudes three-layer and monolayer polyethylene films at Yonkers and at its Flemington Film Products subsidiary in Flemington, N.J., acquired from Tredegar Industries Inc. in 1994. Its three-layer production is sold out, Shemesh said. World Class supplies films for laminations, metalizing and masking applications.
World Class will enter the fast-growing produce packaging market through Barrier Films, which is well-positioned to serve West Coast agricultural markets, Shemesh said. Barrier Films is now running at about 85 percent of capacity, he estimated. Under new ownership, Barrier Films will take back for warehousing about 40,000 square feet of space in Sparks it is now renting to another company. The move will boost Barrier Films' space to 64,000 square feet.
Shemesh estimated privately held World Class' annual sales at about $35 million, all in film extrusion.