Applied Extrusion Technologies Inc. is expanding globally by acquiring Montell NV's oriented polypropylene film business.
AET of Peabody, Mass., agreed in a letter of intent to pay about $220 million for plants in Europe and Australia with annual capacity of about 350 million pounds. Montell spokeswoman Michelle Telmo estimated the business's sales at $200 million last year.
AET President and Chief Executive Officer Thomas Williams said the deal will make his firm one of only two truly global OPP film producers. Mobil Chemical Co. and Hoechst AG teamed up in spring to form a $1 billion OPP film venture with plants in North America and Europe and a total of about 870 million pounds of capacity.
AET plans to buy Montell's Moplefan group with plants in Terni, Battipaglia, San Gimignano and Lamezia, Italy; Liege, Belgium, Brantham, England, and Shorko Australia Pty. Ltd. of Wodonga, Australia, which operates a plant in Wodonga.
Montell announced it expects to complete the sale within six months. Telmo said in an interview from Montell's Brussels, Belgium, office that Montell has no other OPP film plants.
The buyout will more than double AET's production capacity to more than 550 million pounds per year and give it its first production plants outside North America, an AET spokesperson explained. The firm noted in a news release that it will have a competitive advantage because major packaging customers such as Coca-Cola and Frito-Lay increasingly need global suppliers.
The purchase will give AET production in three of the world's four major market regions, North America, Europe and Asia, but not in South America. The deal will introduce cast OPP film to AET. The Montell operations also make blown OPP film.
Moplefan, based in Milan, Italy, was established in 1972 by Montedison SpA to develop markets for OPP film. AET claimed it is the second-largest producer in Europe. Shorko is Australia's largest OPP film producer.
Montell CEO Peter Vogtlander said in a news release that the OPP film business has a better future with AET because the film industry is restructuring globally. Montell will use funds from the sale to support growth in other businesses such as polyolefins and advanced materials.
AET has been expanding its U.S. operations and in April brought on stream a 10-meter-wide OPP film line in Terre Haute, Ind., which it claims is the widest such line in the world. AET's Films Division is based in New Castle, Del., and its Specialty Nets and Profiles Division is in Middletown, Del. AET logged sales of $262 million last year.
AET, established in 1986, entered OPP films in 1994 when it acquired a business from Hercules Inc. It now has four production facilities in North America.