Huntsman Packaging Corp. will expand its offerings in converter films and pallet wrap with its acquisition of Deerfield Plastics Co. Salt Lake City-based Huntsman Packaging, a subsidiary of Huntsman Corp., announced the deal Sept. 17. The purchase is scheduled to be completed next month.
Huntsman Packaging has been on an acquisition spree since it was formed in 1992 by the purchase of film plants from Mobil Chemical Co. and Goodyear Tire & Rubber Co. The company was seventh in Plastics News' recent ranking of North American film and sheet manufacturers.
Huntsman Corp. recently was rebuffed in its bid to buy Rexene Corp., including its CT Films unit. But the Deerfield deal proves Huntsman has found other ways to expand.
Separately, spokesman Don Olsen confirmed Huntsman still is negotiating to buy an undisclosed polymers business, as previously reported.
Huntsman's purchase of Deerfield, and its August acquisition of United Films Corp. of Bloomington, Ind., promise to vault it into the No. 4 spot among North America's film and sheet companies.
Huntsman Packaging Corp.'s film sales were $468 million last year. Deerfield had film sales of $99.9 million for the year ended April 27. Officials have not disclosed United Films' sales.
Deerfield will expand Huntsman Packaging's production in the eastern United States, where it has little capacity. Deerfield's plants are at its head office in South Deerfield, Mass., and in Danville, Ky.
The deal is more strategic to Huntsman's product mix. Deerfield, a major in lamination and other converter films made from polyethylene, swells Huntsman's modest share of this market, according to Kyle Rossler, Huntsman Packaging's vice president of marketing and new business development. Deerfield's PE pallet wrap capacity significantly boosts Huntsman's stake in that market, Rossler said in a telephone interview.
Huntsman temporarily could be North America's third-largest pallet wrap producer, after Tenneco Inc. and Atlantis Plastics Inc., estimated Brendan Barba, president and chief executive officer of AEP Industries Inc. He said AEP is now third in that market, but should be the biggest when it completes its acquisition of Borden's plastics packaging business by mid-October. Rossler said major shifts in the pallet wrap market this year could make Huntsman second-largest after AEP.
Rossler said the United Films purchase also was important because it made Huntsman the second-largest producer of cereal, cracker and cookie barrier packaging after Printpack Inc.
United Films complemented Huntsman's existing capacity for those products at Birmingham, Ala., and Dallas.
United Films' products typically include nylon and ethylene vinyl alcohol barrier layers, high density PE film and a seal layer.
Huntsman estimated that Deerfield's 140 million pounds of annual capacity will boost its total PE film capacity to 440 million pounds per year.
Deerfield Chairman Charles Barker said in a news release that his 43-year-old company regards Huntsman as an excellent partner. He and other Deerfield officials were not available to comment on the deal.
Huntsman did not disclose terms of the Deerfield deal and officials would not confirm a rumored purchase price of about $100 million.
Packaging mergers are shaking up the order of North America's largest film manufacturers and converters.
Huntsman should pass current fourth-place holder Cyrovac Division of W.R. Grace & Co., which had about $550 million in sales last year.
AEP, when it completes the Borden acquisition, will comprise businesses that had 1995 North American sales of more than $480 million. Printpack's recent purchase of James River Corp.'s flexible packaging business gave it global sales of more than $1 billion.
Jon Huntsman, chairman and chief executive officer of privately held Huntsman Corp., noted in a news release that the Deerfield deal ``is another step toward our corporate goal of doubling our product capacity, revenue and earnings by the end of the year 2000.''
Huntsman, a $4.3 billion-per-year diverse chemical company, could not persuade Rexene's board to agree to a takeover in the summer, despite offering a hefty premium in its $15 per share offer.
Rexene's 1995 sales were $615.2 million, including $170.5 million from its Dallas-based CT Film business.