Two closely connected Missouri companies are stepping aggressively into the plastics industry.
In mid-1998 C3 Holdings LLC created SciTech Plastics Group LLC to acquire and improve plastics operations.
SciTech plans to buy three or four plastics processing companies during the next 12-18 months. It made its first acquisition a year ago, where it currently is adding sensor and controller technology.
In April 1998, private merchant bank C3 acquired Day's Molding & Machinery Inc. of Constantine, Mich., from founder Gary Day. Terms of the deal were undisclosed.
C3, formed in 1994, specializes in acquisitions, financing and consolidations involving chemicals, mortgage banking and, now, plastics. SciTech and C3 Holdings are on the same floor of a Kansas City, Mo., building. C3 has another office in Dallas.
SciTech provides marketing, sales, financial control and part-production resources to increase productivity.
Day's Molding is now a limited liability company. It had annual sales of about $10 million at the time of the acquisition. Sales now exceed $12 million, said Wally Meyer, who joined SciTech as president and chief executive officer in June.
Day's Molding opened in 1978, employs 125 and operates 35 presses of 75-300 tons. It makes parts primarily for medical markets. Day continues to run the business as president.
``C3 had the original responsibility to identify a target market, help raise capital and assemble a management team,'' Meyer said in a telephone interview.
At first, SciTech targeted plastics processors with sales of $5 million to $20 million, but additional market input has prompted a higher range: $8 million to $30 million.
Part of SciTech's mission is to ``infuse acquired operations with business-process-improvement knowledge,'' Meyer said. ``So far at Day's, we are upgrading molds to include sensors, upgrading controllers and upgrading training. We are already seeing scrap rates fall.''
Employing six, SciTech draws from technology experts John Bozzelli of Midland, Mich., and Carson Payne of Boulder, Colo., to improve Day's Molding. SciTech named Bozzelli part-time chief technology officer and Payne full-time chief information officer.
Kansas Financial Group of Kansas City brought Day's Molding to the attention of C3 officials. Now two key Kansas Financial Group officials have roles in SciTech. Tom Dolembo is its part-time chief strategic marketing officer, and George Nicholson is full-time chief financial officer.
SciTech plans to attain at least $100 million in annual sales, then target injection molders with sales in the $50 million to $250 million range.
SciTech originally chose not to pursue bigger firms because it feels larger companies currently have overinflated valuations. Those operations want multiples of seven or eight times adjusted earnings before business acquisition and consolidation expenses, interest, taxes, depreciation and amortization, SciTech said. Most smaller targets carry multiples of five or six.
C3 was attracted to the plastics industry by the market growth and the ability to apply high-technology devices to operations, Meyer said.
In January, C3 Holdings brought in two equity holders, BankBoston Corp.'s capital ventures subsidiary in Boston and Massachusetts Mutual Life Insurance Co. in Springfield, Mass., initially raising $15 million for the acquisition program.