Alltrista Corp. will become North America's largest industrial thermoformer by acquiring Triangle Plastics Inc. The deal will boost Alltrista's industrial thermoforming sales to about $153 million a year, well ahead of its nearest rival, Durakon Industries Inc., which had such sales of $92 million last year.
Alltrista announced a definitive purchase agreement March 15. It said it will pay $148 million for Triangle's assets while the seller, founder and chairman of Triangle, James L. Blin, will retain an undisclosed amount of debt. Triangle had sales of $114 million last year.
Indianapolis-based Alltrista said it will combine Triangle's five production facilities and a technical center with its own plastics group. It indicated in a news release that it will pursue other acquisitions in thermoforming and materials handling.
Thomas Clark, Alltrista president and chief executive officer, said his firm is aiming at $500 million in sales and $50 million in operating profit by year 2002. Alltrista recorded 1998 sales of $244 million, of which 42 percent was from plastics. Plastics News estimated its total 1998 thermoforming sales at $47 million in its recent ranking.
Lynn Osterhaus, Triangle vice president of human resources, said Alltrista might expand Triangle's capacity since ``we see our sales growing to original equipment manufacturers.'' She said in a telephone interview that the two companies hope to finalize the deal by the end of March.
``Triangle has a meaningful size and a strong management team, plus we are buying a business and a technology with which we are familiar,'' Clark said in a news release.
Triangle makes heavy-gauge parts for trucking, agriculture, portable-toilet, recreational and construction markets. Its plants are in Oelwein and Winthrop, Iowa; Cookeville, Tenn.; and Auburndale, Fla. Its technical center and headquarters are in Independence, Iowa.
Triangle's TriEnda Corp. subsidiary thermoforms materials-handling products, an attractive market to Alltrista. Plastic pallets account for only 4-6 percent of the U.S. pallet market and have strong growth potential, Alltrista said.
TriEnda's plant is in Portage, Wis. Major customers include the U.S. Postal Service, and grocery, printing, textile, chemical and pharmaceutical companies. TriEnda accounts for about 40 percent of Triangle's sales, Osterhaus said.
Materials-handling products will be a new market for Alltrista, spokesman Larry Miller said in a telephone interview. Alltrista's main thermoforming markets now are refrigerator door liners for Whirlpool Corp., bathware, plastic tables, recreational vehicles and manufactured housing. It also does a small amount of thermoformed packaging, Miller said.
Competitor Durakon avoids materials-handling markets because the products have low profit margins, according to Craig Parr, vice president of the Lapeer, Mich., firm.
Analyst Matthew Striebel said the purchase fits Alltrista's strategy of trying to dominate its markets. It is the biggest U.S. player, for example, in home canning, with the Kerr and Ball brands.
Striebel, with NatCity Investments in Indianapolis, said the deal will be good for Alltrista in the long term. However, institutional investors pushed the company's stock price down March 17 to $21.88, from $23.88 per share before its March 15 announcement. Some investors sold shares because they would prefer that Alltrista buy back shares with its rich cash flow rather than make a big acquisition.
Alltrista's plastics business comprises industrial thermoforming, with $38.6 million in sales last year; packaging, $28.1 million, and custom injection molding, $36.1 million. About a quarter of packaging sales are thermoformed containers; most of the rest is sheet supplied for in-house thermoforming at food and pet-food plants. Main injection molding markets include health-care, consumer products and shotgun-shell casings.
Striebel estimates that Alltrista's debt-to-equity ratio, now about 33 percent, will climb to 70 percent or more after the Triangle buyout.