AEP Industries Inc. continues its acquisition binge and augments its presence in Australia with the purchase of ICI Australia Ltd.'s Visqueen polyethylene film business.
The transaction strengthens AEP's position as Australasia's second-largest supplier of flexible packaging, according to Brendan Barba, chairman and chief executive officer.
``In addition to complementing our current activities in Sydney and Melbourne, Visqueen will significantly increase our extrusion capacity while providing us entry into the industrial and agricultural markets in Australia,'' Barba said in a news release.
AEP Industries (Australia) Pty. Ltd. announced the deal July 18, and expects the transaction to be complete by the end of the month. Terms were not disclosed.
The deal includes the plant on 23 acres in Chester Hill, Australia, near Sydney. It employs about 60, and all will transfer with the business to AEP. The sale also includes 13 blown film lines and other equipment at the plant.
``We have taken the strategic decision to sell this particular plastic film business to enable us to focus on expansion of our cast polyethylene film business based in Victoria, and Kuala Lumpur in Malaysia,'' Tony Fincham, ICI Australia Films Division general manager, said in a news release.
The Visqueen operation produces a range of industrial PE films, including pallet wrap and shrink wrap. These are used primarily in the brewery, soft drink and glass manufacturing industries. Last year, the division reported sales of about A$27 million (US$21 million).
In May, London-based Imperial Chemical Industries plc announced it would begin selling its 62 percent stake in its Australian subsidiary in July. The shares were offered to institutional and retail investors in Australian and international equity markets. Although still named ICI Australia, it now is separate from ICI plc and plans to change its name to reflect that split.
ICI Australia operates three divisions — plastics, chemicals and explosives — which recorded sales of US$2.7 billion for the year ended June 30. The plastics unit, producing PE, PVC and polypropylene, sustained a 97 percent plunge in profit from US$56.8 million in 1995 to US$1.57 million in 1996.
``This is a further step in refocusing and rationalization of our business, which has been occurring for some time,'' Philip Weickhardt, ICI Australia managing director, said in a news release.
``The company will continue to take the best strategic decisions overall in terms of selling, acquiring and growing existing businesses.''
On the other hand, AEP recently acquired an oriented PP film laminator, printer and converter in Sydney, building on the firm's acquisition of Borden Inc.'s global packaging business. Before the Borden buy, AEP did not have flexible packaging operations in Australia.
The Visqueen film business purchase ``allows us to consolidate our many operations in the Sydney area into one plant site,'' said an AEP spokesman.
The gradual consolidation involves nine buildings around Sydney. The five facilities in Melbourne will not be affected. AEP expects its Australian unit to post sales of US$40 million this year, prior to the transaction.
AEP Industries Inc. of South Hackensack, N.J., manufactures flexible packaging film, including PVC film and PE printed film and bags.
It also supplies laminated and converted products to the frozen-food, retail confectionery and snack-food markets.
AEP Industries also serves industrial and agricultural markets. It has operations in 12 countries throughout North America, Europe, Asia and Africa.
