Laminations maker and polystyrene foam packager Tekni-Plex Inc. has acquired PureTec Corp., a plastics group with twice its sales and number of employees.
Tekni-Plex of Somerville, N.J., will acquire Ridgefield, N.J.-based PureTec for $3.50 cash per share, a price that represents a premium of about 30 percent on PureTec's closing stock price Nov. 11. The total value of the deal, including $215 million in assumed debt, is $325 million.
Numbers posted by Tekni-Plex last year — $170 million in sales, 900 employees at seven sites — are overshadowed by PureTec's totals of $345 million in sales and 1,900 employees at 22 sites. PureTec's recent financial woes, however, level this playing field.
PureTec — formed in 1995 from recycler Pure Tech International, Ozite Corp. and a division of Occidental Chemical Corp. — reported a loss of $2.8 million for its 1997 fiscal year, which ended July 31. That followed a loss of $8.2 million in fiscal 1996.
The company's financial blues can be tied to lower prices for recycled resins, particularly PET, as well as discontinued operations, including its Styrex Industries injection molding unit, which was put up for sale in June.
Fourth-quarter results were promising, though, as sales rose 7.3 percent and profit was $3.9 million. By comparison, PureTec took a loss of $6.3 million in the third quarter of 1996.
Along with Pure Tech Inc., other business segments include Colorite Plastics, a leading manufacturer of garden hose and medical tubing, and Colorite Polymers, a maker of specialized PVC resins and compounds, including those used in vinyl flooring. PureTec also has a high profile in the dispenser market, where it makes aerosol and spray pump dispensers.
``It's certainly a case of a smaller company swallowing a larger company,'' PureTec investment relations director William Walkowiak said in a Nov. 12 telephone interview from Ridgefield. ``But [Tekni-Plex] is stronger financially and they have a commitment for the funds they need to finance the deal. This is a way for us to take the company private and run it as a private company.''
Tekni-Plex — which makes clear, high-barrier laminations used in pharmaceutical packaging, as well as foamed PS for food packaging — has received financing commitments from Morgan Guaranty Trust Co. of New York.
Tekni-Plex has increased its sales more than threefold since 1994 through several moves, including its acquisition of PurePlast Inc., a calendered PVC maker in Cambridge, Ontario.
The sale became necessary when PureTec realized it could not meet its goal of becoming a $1 billion company.
``Over the past two years, it has become evident that our existing operations alone were not providing the level of growth needed to achieve this objective,'' Fred Broling, PureTec chairman and chief executive officer, said in a statement. ``Recognizing that we need growth to thrive in our competitive markets, PureTec's board has agreed to combine our strengths with those of Tekni-Plex.''
F. Patrick Smith will serve as chairman and CEO of the new business, which will keep the Tekni-Plex name. Broling will retire when the deal is completed during the first quarter of 1998.
