TORONTO - Winpak Ltd. is looking at acquisition opportunities in plastics packaging, the company's president told shareholders at its May 7 annual meeting in Toronto. J. Robert Lavery said the global packaging industry ``is ripe for consolidation, despite the hundreds of mergers and acquisitions in the past five years.''
The world market, which he estimated at C$500 million (US$362.5 million) per year, is still highly fragmented compared to other sectors such as automotive and electronics.
Lavery said in an interview after the meeting that Winpak has looked at potential acquisitions and gets ``a call about every week'' from firms that might want Winpak to buy them. Early this year Winpak concluded the purchase of packaging machinery supplier W.A. Lane Inc. of San Bernardino, Calif., but so far no other takeover candidate has met Winpak's criteria.
The Winnipeg, Manitoba, company is interested primarily in takeover opportunities in food packaging areas where it is not now a supplier, as in frozen-food packaging, Lavery said. It now supplies a range of flexible and semirigid food packaging and an acquisition target likely would use similar materials.
Lavery earlier told shareholders that acquisitions are an effective way to expand in packaging because capital requirements are high when a firm enters a new market.
Winpak expects its purchase of W.A. Lane will do more than expand its machinery sales. Lane has about 315 machines in customer plants and these represent a large new potential market for Winpak's packaging materials.
Lavery told shareholders that first quarter results were disappointing but were in line with historic first quarter activity. Its sales for the quarter ended March 31 were C$66.2 million (US$48 million), down from C$67.2 million (US$48.7 million) a year earlier when sales were brisk because of customer inventory buildup. Profit for the latest period was C$2.5 million (US$1.8 million), down from C$3 million (US$2.2 million).
Sales and profit for 1995 were C$281.2 million (US$203.9 million) and C$10.3 million (US$7.5 million), respectively.
Lavery said Winpak also is looking at geographic expansion opportunities in South America, China and other developing regions where packaging is an immature market.
The company is the only publicly held subsidiary of Wihuri Oy of Helsinki, Finland, and would be able to raise capital in stock markets to help fund expansion. Wihuri is a private, diverse firm that owns about 52 percent of Winpak.
The parent company and subsidiary share technology on a royalty-free basis.