By: Don Loepp
February 5, 2013
Jabil Circuit Inc.'s $665 million deal to buy Nypro Inc. is one of the biggest acquisitions we've seen in plastics processing in a long time. And -- surprise -- it's a big deal without any private equity involvement. That's pretty notable in the current plastics M&A market.
It's bigger than last year's blockbuster deal, PolyOne Corp.'s purchase of Spartech Corp. for almost $400 million.
We've seen some pretty big acquisitions in recent years -- especially in the auto market, where suppliers have raced to reach the $1 billion threshold in annual sales.
But what strikes me about the Jabil-Nypro deal is that Nypro is already a global injection molder, with annual sales surpassing $1 billion and a menu of services including design, toolmaking, molding and contract assembly.
If Nypro felt the need to get even bigger, what does that mean to smaller molders?
Let's also take a look at what others are saying about the deal today.
Tiernan Ray in Barron's Tech Trader Daily blog, quotes a few stock analysts who are fairly positive about the purchase.
Citigroup's Jim Suva says, in part: "... this is a positive for the following reasons: 1) Strategically this acquisition fits in very well into Jabil's current product offering of Green Point in its Diversified Manufacturing Segment (DMS), which does Apple iPhone casing and other cell phone casings. 2) Favorable end-market mix of 45 percent healthcare, 32 percent consumer electronics, 23 percent packaging appears adept to leverage Jabil's current Green Point and DMS competences."
If you want to read something really positive about the deal, check out Robert Trigaux's Venture blog on the Tampa Bay Tribune's website, with the eye-catching headline "Move over Match.com: Jabil says culture mix with acquisition Nypro better than speed dating."
"Bottom line? They met. They dated. It was love at first sight," Trigaux wrote.
Jabil has a company-sponsored blog that covers the details-behind-the-deal today too: "Jabil acquires Nypro to deepen diversified manufacturing capabilities globally."
(Note to Jabil's PR staff: maybe you should hire Trigaux to punch up those headlines.)
The post has some good background information for anyone interested in all of the details about why Jabil is buying Nypro. In a section headlined "Just why Nypro?", it notes: "Not only does Nypro provide complementary competencies to Jabil, it has a similar passionate, entrepreneurial culture and a superb reputation for quality. As Tim Main noted, 'Nypro has a superb reputation in the marketplace with a very strong cultural affinity with Jabil. The acquisition produces a partnership unique in the industry.'"
The blog highlights the two companies' "laser focus on growing diversified manufacturing," adding:
"Jabil doesn't acquire companies quickly or often, so its acquisition of Nypro is noteworthy. The acquisition accelerates Jabil's aggressive plans for growing its diversified manufacturing business, especially in the healthcare sector, lending immediate credibility in key markets such as drug delivery & diagnostics. Jabil is now positioned as the only full-service healthcare manufacturer in consumer packaging and disposables providing simplified supply chain solutions and product innovations in converged products.
"Jabil's experience in electronics and optics, combined with Nypro's experience in healthcare and consumables, create big opportunities. Financially, the deal opens Jabil to the high-growth $140 billion plastic packaging market and adds $205 billion to Jabil's addressable market."
Readers who want more information about the deal should check out the transcript of yesterday's conference call (PDF).
What do blog readers think about Jabil buying Nypro? Plastics News senior reporter Bill Bregar will be continuing to cover the story this week, and there are plenty of angles to pursue. Let us know your questions.