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

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

Acquisition expands Rieke Packaging's stake in Asia

July 28, 2014 4:39 pm ET

Diversified rigid packaging components producer Rieke Packaging Systems now has a bigger footprint in Asia.    More

Image

Who are the fastest growing pipe, profile and tubing extruders?

July 28, 2014 3:09 pm ET

Question: What's the word on this week's Plastics News annual ranking of the top Pipe, Profile and Tubing extruders in North America? Answer: Up....    More

Image

Two medical device makers add specialty products through acquisitions

July 28, 2014 3:02 pm ET

The medical merger mania continues this summer as two more medical device manufacturers are swallowed up by bigger competitors.    More

Image

Deal combines US packaging thermoformers

July 28, 2014 12:42 pm ET

Thermoformed medical packager Nelipak Corp. is expanding its North American holdings and access to the U.S. health care market with the purchase of...    More

Image

Sealed Air's move to Charlotte will put it all under 'One Roof'

July 25, 2014 2:03 pm ET

Sealed Air Corp. shook the ground last week by announcing plans to relocate its headquarters from Elmwood Park, N.J., to Charlotte, N.C., in a move th...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

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

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events