Private equity firm buys diversified plastics company Tekni-Plex

By Frank Esposito
Senior Staff Reporter

Published: November 18, 2013 2:58 pm ET
Updated: November 22, 2013 12:18 pm ET

Related to this story

Topics Mergers & Acquisitions, Packaging, Compounding, Extrusion, Film & Sheet, Thermoforming

Private equity firm American Securities has purchased specialty plastic films maker Tekni-Plex Inc. for an undisclosed price.

New York-based American Securities “found Tekni-Plex very attractive given our strategy of investing in market-leading companies,” managing director David Horing said in a Nov. 18 news release. “We believe the company is poised for a strong future.”

Tekni-Plex operates 25 plants in nine countries worldwide. The King of Prussia, Pa.-based firm consists of eight companies, including blister pack film maker Tekni-Films and perishable food packaging producer Dolco Packaging of Decatur, Ind. Other business units operated by Tekni-Plex — which was founded in 1967 — include Colorite Compounds and Action Technology, a leading plastic tubing maker.

In the year ended June 30, 2012, Tekni-Plex had sales of almost $655 million. More recent sales numbers were unavailable, but industry sources said that the recent sale of Tekni-Plex’s Swan Hose business lowered the firm’s annual sales to about $575 million.

American Securities is buying Tekni-Plex from Los Angeles-based Oaktree Capital Group LLC and Avenue Capital Group of New York. Those two private equity firms had been majority owners of Tekni-Plex since 2008.

Market sources told Plastics News that American Securities was paying about $800 million for Tekni-Plex. That amount would be about eight times annual EBITDA for Tekni-Plex, sources said.

In the release, Tekni-Plex CEO Paul Young said that working with American Securities “will enhance our ability to service our customers worldwide through ongoing investment in product development, technology and expansion of our global footprint.”

American Securities already owns a major plastics asset in the form of Advanced Drainage Systems Inc., the Hilliard, Ohio-based firm that ranks as North America’s largest maker of high density polyethylene pipe. ADS — with annual pipe-related sales of just over $1 billion — checked in at No. 2 in a recent Plastics News ranking of the region’s largest pipe, profile and tubing makers.

Industry consultant Peter Schmitt said in an email that Tekni-Plex “offers a new buyer strong share position — number one or number two — and margins in its business segments, especially in its healthcare and specialty segments.”

“A buyer will find the potential to scale the restructured Tekni-Plex attractive,” said Schmitt, who’s managing director with Montesino Associates LLC in Wilmington, Del. “Scaling strategies include acquisitions, divestment of a segment to fund the growth of a preferred portion of the business, or accelerating the adoption of new technologies in segments where Tekni-Plex already enjoys margins and share.”

He added that five years of ownership “is about typical for an Oaktree holding.”

The next step in Tekni-Plex's path, according to Schmitt, is “scaling the now streamlined company, aiming at faster and larger growth, gaining strategic market shares, and launching targeted new products.”

In September, plastics M&A pros Bill Ridenour and John Hart each predicted that Tekni-Plex — as well as plastic film leader Klockner Pentaplast Group, which remains on the market — would be sold to another private equity firm.

Ridenour — owner of Polymer Transaction Advisors Inc. in Newbury, Ohio — said at the time that selling Tekni-Plex “might be a challenge because of its diverse product mix.”

Hart — plastics and packaging group director for P&M Corporate Finance LLC in Southfield, Mich. — added that neither Tekni-Plex nor Klockner “has a real obvious strategic buyer.”

In April, Tekni-Plex sold Swan Hose to Jacobson Partners, a New York-based private equity firm, for an undisclosed amount. Tekni-Plex officials said at the time that they made the sale "to allow us to focus on our core health care, food packaging and specialty segments." They also said that the company would use the sale proceeds to reduce debt. Tekni-Plex bought the Swan business in 2001 from Mark IV Industries Inc.

The sale of Swan came a few month after Tekni-Plex spent $9 million in late 2012 to upgrade a plant making multilayer flexible packaging structures in Flemington, N.J.


Comments

Private equity firm buys diversified plastics company Tekni-Plex

By Frank Esposito
Senior Staff Reporter

Published: November 18, 2013 2:58 pm ET
Updated: November 22, 2013 12:18 pm ET

Post Your Comments


Back to story


More stories

Image

China's biggest fuel tank maker getting a US foothold

April 23, 2014 4:41 pm ET

The majority owner of China's biggest fuel tank maker is expanding its global automotive footprint with the acquisition of the fuel tank unit of...    More

Image

China's Shide Group, BASF unveil 'revolutionary' all-plastic window profile

April 23, 2014 9:10 pm ET

SHANGHAI — The PVC window profile market in Asia is expected to increase four-fold by 2025, and Chinese building products maker Dalian Shide...    More

Image

How CEO Santi is changing ITW

April 23, 2014 2:48 pm ET

Scott Santi is showing he can do more than just cut costs at Illinois Tool Works Inc.    More

Aston Martin learned what we've known about complex supply chain

April 23, 2014 1:32 pm ET

The story of the United States' trade deficit with China (over $318 billion in 2013) is one that most of us are familiar with. Cheaper labor costs...    More

Quality Vision buys ShapeGrabber

April 23, 2014 10:19 am ET

Quality Vision International Inc. of Rochester, N.Y., has purchased ShapeGrabber Inc., a maker of automated three-dimensional scanners, in a deal anno...    More

Market Reports

Market Data Book - Rankings & Lists

A one-stop download of Plastic News' exclusive annual lists and processor rankings containing essential data including sales, employees, end markets, materials and more.
EXCLUSIVE EXCEL FEATURE: full mailing address details for available plant locations.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Mold Making and Tooling Review and Outlook 2014 North America

This report provides in-depth analysis of the mold and toolmaking market for North America, including discussions of trends, opportunities, threats, the latest developments in production and labor and equipment trends impacting moldmakers.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events