By: Catherine Kavanaugh
September 20, 2013
Two major shareholders of Richmond, Va.-based Tredegar Corp. have signaled that change could be coming for the global manufacturer of film products used for flexible packaging, personal care and protective covers for electronic screens.
Brothers John and William Gottwald "have concluded" that shareholders would be best served by the board of directors considering "strategic alternatives" for the company, according to a Sept. 6 filing with the U.S. Securities and Exchange Commission.
John Gottwald, the company's retired CEO, and William Gottwald, vice chairman of the board, report that they "might discuss potential courses of action with their father," Floyd Gottwald Jr., who also is retired. The trio owns 22.8 percent of Tredegar's shares, according to the filing.
The brothers did not elaborate on what strategic alternatives they want the board to consider. However, the choice of words often indicates plans to pursue a company sale, merger, unit spinoff or some other major change.
Tredegar released the a statement in response to the action: "Tredegar welcomes and appreciates the perspectives of shareholders, but we cannot speculate on John and William Gottwald’s intentions. Other than the Gottwald family members, the rest of the board and the management team are confident that we are executing the right strategy to enhance value for all shareholders, and will continue to take actions that we believe will enable us to achieve this objective.
"In 2010, we began implementing key initiatives focused on accelerating profitable growth while reducing customer and end-market concentration through accretive strategic acquisitions and organic growth. This strategy has delivered results – 2012 net sales and earnings per share from ongoing operations have increased 35 percent and 40 percent respectively compared with 2009. In addition, we achieved more than 10 percent sales growth and more than 37 percent earnings per share growth in 2012 compared with 2011.
"The Tredegar board of directors and management team look forward to continuing an open dialogue with shareholders regarding our plans to drive growth and create value."
Tredegar was created in 1989 from a spinoff of the plastic, aluminum and energy divisions of Ethyl Corp. Tredegar eventually dropped the energy unit and focused on plastic and aluminum. The company's film products include non-woven laminates used for baby diapers and personal-hygiene products. The film packaging is used by the food industry and as overwrap for bathroom tissue and paper towels while the aluminum division makes extrusions for the construction, automotive and equipment industries.
Corporate sales are $882.2 million, with the film operation ranked No. 12 last year, according to Plastics News' survey of North American film and sheet manufacturers. Film sales were $611.9 million in 2012.
The latest investor presentation identifies market drivers as aging baby boomers buying more adult incontinence products, growth in tablet and smartphone sales, and expected demand for flexible packaging, particularly food packaging during the 2014 World Cup and 2016 Olympics in Brazil.
Tredegar has 2,700 employees in 18 locations in North America, Europe, Asia, and South America.