In a $60 million deal scheduled to be completed by the end of April, Ivex Packaging Corp. has agreed to buy container maker Ultra Pac Inc. for $15.50 a share.
The move will beef up Ivex's relatively small PET food-packaging segment, said Richard Cote, Ivex vice president and treasurer. The company had planned to grow PET internally. Now those plans include Ultra Pac.
``We bought the market leader in that area,'' Cote said in a telephone interview last week. ``We will use the management and talents there to continue to grow it.''
Ultra Pac, with roughly $62 million in sales, will operate as an independent business unit within Ivex, George Bayly, Ivex president and chief executive officer, said in a March 23 news release.
The offer was announced March 23. The boards of both companies unanimously approved the transaction.
Lincolnshire, Ill.-based Ivex has been on the acquisition trail for more than a year. Since mid-1996 the firm's plastics acquisitions have included Plastofilm Industries Inc. of Wheaton, Ill.; Trio Products Inc. in Elyria, Ohio; Viskase Ltd.'s oriented polystyrene operations in Sedgefield, England; Laval, Quebec-based M&R Plastics Inc.; 50 percent of Allplax Inc.'s thermoforming plant in Salinas, Puerto Rico; and Avpex International Inc. of Newcastle, Ontario. Most recently thermoformer Crystal Thermoplastics of Cumberland, R.I., was added to the mix.
Ivex became a publicly traded company Oct. 1, when it raised about $125 million in an initial public offering on the New York Stock Exchange. It had tried to stage an IPO in 1995, hoping to raise funds to reduce debt, then scrapped the move when a volatile equity market did not cooperate.
The firm operates 10 thermoforming plants in North America and employs more than 1,500 in those operations. Of its $540 million in total sales, about $180 million comes from its North American thermoforming business.
Ivex's Kama Corp. subsidiary, based in Hazleton, Pa., reported sheet and film sales last year of $185 million. Kama employs about 430.
Ivex claims to be the world's largest manufacturer of biaxially oriented PS sheet and film, extruding more than 300 million pounds per year. The firm is a major producer of PS sheet, and thermoformed OPS containers, sold to the grocery store, fast-food and food-service markets for packaging delicatessen foods, salads, bakery goods and other foods—making Tenneco Packaging one of its main competitors.
Ultra Pac operates a manufacturing facility in Rogers, Minn., and established distribution hubs in Florida and California last year. The company extrudes virgin and recycled PET into sheet, mainly for in-house use, thermoforming it into containers for supermarket, bakery, produce and prepared-food applications.
Because of excess capacity, it also extrudes a small amount sheet for other manufacturers.
Ultra Pac, which downsized its work force in 1997 in an effort to streamline production, has built it back up to roughly 375. The firm operates six extrusion and 33 thermoforming lines.
Under terms of the agreement announced March 23, a subsidiary of Ivex offered to acquire about 3.88 million outstanding shares of Ultra Pac for $15.50 per share in cash.
Ultra Pac's stock closed March 20 on Nasdaq at $6.6875 and opened March 23 at $14.875.
Late last month, Ultra Pac adopted a shareholder rights plan to protect against unwelcome takeover tactics.
For the year ended Jan. 31, 1997, Ultra Pac reported sales of $61.7 million, ranking No. 16 in Plastics News' annual survey of North American thermoformers. The business could push Ivex's thermoforming sales past $240 million, and put it neck and neck with Sweetheart Cup Co., which holds the No. 3 spot, with estimated sales of $237 million for fiscal 1997. Ivex now stands at No. 4.