Continuing the ``bigger is better'' trend of mega-consolidations in the packaging industry, James River Corp. has agreed to sell its flexible packaging business to Printpack Inc. for $365 million. The deal, announced April 10, brings together two of North America's largest manufacturers of flexible plastics packaging and will form a converting and packaging business with more than $1 billion in annual sales. The sale, due to be complete by midyear, will make Printpack the largest flexible packaging producer in the world, according to Tim Burns, president of Cranial Capital Inc., a packaging research development and advisory firm in Chagrin Falls, Ohio.
According to James Love, vice president for business development for Printpack, the acquisition creates new horizons for his company.
``It definitely opens new doors for us,'' he said. ``We definitely plan to stay in flexible packaging, and some of the areas where James River was a player are very attractive.''
``What makes this such an exciting acquisition are the areas where we overlap and the areas where we don't,'' said Richard Botsch, vice president for business development of Printpack. ``We are big in snack foods, confectionery and soft drinks, and [James River is] large in bakery bread bags and a number of other areas.
``Then there are the places where we serve the same markets, like fresh produce bags.''
Botsch said Printpack has set up a transition team to implement the purchase as quickly as possible, but added it is premature to speculate on what effect the sale would have on operations at either company.
``It is a perfect fit,'' Burns said. ``James River's plastic business was the tail of a big dog that had relatively old and inefficient facilities in some cases, and had disappointing stock performance and was starved for capital.''
Burns said he thinks Printpack may have coveted James River's involvement in some areas where the former is not as large a player.
``Printpack may have needed it more than James River, in that a large proportion of their business is in the snack food category. The acquisition will enable them to consolidate customers and seek new customers, and achieve savings by cutting duplicate services like sales and marketing, and research and development.''
James River, based in Rich-mond, Va., announced in Decem-ber that it would sell its plastics business to concentrate more fully on its paper, paperboard and other paper-related businesses.
Printpack, headquartered in Atlanta, will acquire the Milford, Ohio-based James River plastics business, which operates 24 converting lines in 10 North American plants, and had 1995 sales of about $490 million.
James River has lamination and coating facilities in St. Louis; Dayton, Ohio; Shreveport, La.; and San Leandro, Calif. The company also has film and converting plants located in New Castle, Del.; Orange, Texas; Greensburg, Ind.; Jackson, Tenn.; and Aguascali-entes, Mexico; and a rigid container plant in Williamsburg, Va.
James River was 10th in Plastics News' 1995 ranking of North American film and sheet manufacturers, with $420 million in sales, while privately held Printpack ranked seventh, with 11 plants and $465 million in sales for fiscal 1995.
Other mega-mergers and acquisitions in the past year have changed the face of both the flexible plastic and rigid packaging industries.
Notable among them was the merger of Philadelphia-based Crown Cork and Seal Co., the world's largest producer of both metal cans and plastic bottles for the beverage industry, with similarly sized CarnaudMetalbox SA of Paris. The merger, consummated early this year, resulted in the largest packaging firm in the world, with about $10 billion in sales.
A second move saw Tenneco Inc. enlarge its Packaging Corp. of America subsidiary by buying Mobil Chemical Co.'s plastics division to form Tenneco Pack-aging Co.