Polymer Group Inc. has diversified into compounding by acquiring a minority interest in Boom Color and Compounding Inc. of Wichita, Kan.
Boom supplies compounds to Polymer Group's Fabpro Oriented Polymers Inc. subsidiary acquired in March. It compounds polyethylene, polypropylene and acrylics for Fabpro and injection molders.
Polymer Group made the investment partly to bolster the young company's capital base, said Grant Reeves, chief operating officer for Polymer Group's Oriented Polymers Division.
Boom started in 1996 and has been threatened by intense price competition from regional compounders, Reeves said in an interview from his firm's North Charleston, S.C., head office. He did not disclose the size of the investment but said it eventually could lead to a majority stake in Boom.
Polymer Group does not compete with Boom's customers, Boom President Terry Rosenboom said in a news release. Boom will continue to serve existing customers.
Boom represents Polymer Group's first investment in a stand-alone compounder. Polymer Group has in-house compounding capability, but it wanted to ensure Boom's viability, Reeves said. Its investment will allow Boom to add a fourth compounding line and boost capacity to 20 million pounds per year in 1999. Boom represents a reliable local supplier to Fabpro and other customers and will help Polymer Group develop specialty additives.
Polymer Group paid about $48 million to Exxon Chemical Co. to acquire the Fabpro business. Fabpro makes twine and netting for commercial and agricultural markets.