SAO PAULO, BRAZIL — Huhtamaki Oy is acquiring another packaging firm, even as it negotiates a megamerger with global giant Van Leer NV.
Espoo, Finland-based Huhtamaki announced June 9 it is purchasing Brazilian molder Brasholanda SA Equipamentos Industriais.
The companies have signed a letter of intent to the deal, which will see Huhtamaki acquire 86 percent of Curitaba, Brazil-based Brasholanda for an undisclosed sum.
The purchase is expected to close in August.
The Brazilian thermoformer and injection molder employs 600 at its 270,000-square-foot complex in Curitiba, plus its Sao Paulo sales office. The company consumes about 55 million pounds of resin annually.
Brasholanda recorded 1998 sales of 75 million reais ($42.8 million), according to Marcelo Busato, the company's chief financial officer.
The company also extrudes plastic sheet, which it thermoforms into yogurt cups and margarine tubs. It also sells some sheet to outside converters.
The acquisition gives a powerful boost to Huhtamaki's global aspirations, adding plastic packaging capacity to its small joint venture, a paper-based food-service unit, Kaps SA, in Buenos Aires, Argentina. The deal also provides a sales office for its Polarcup division in Chile.
Brasholanda claims to be the second-largest company in its food-packaging niche in Brazil and in South America. Brasholanda claims market shares of 25-60 percent in key areas such as margarine tubs, yogurt cups and ice cream containers, according to Huhtamaki.
Brasholanda customers are major multinational food processors including Unilever NV, Nestle SA, Groupe Danone and Parmalat Finanziaria SpA, according to Huhtamaki.
The three partners in Brasholanda are Busato ParticipacÃµes, which owns 51 percent, Sao Paulo investment company Umuarama ParticipacÃµes, which owns 31 percent; and Sao Paulo-based Bradesco bank, which owns 18 percent. The company was formed as a family business in 1962.
``The Latin American economic situation has slowed down our expansion in the region and made us extra careful. But Brasholanda has always been a top choice for us,'' said Timo Peltola, Huhtamaki chief executive officer. ``The company will form the core of our South American food-packaging operations.''
Peltola said Huhtamaki made its first contact with the Brazilian firm about 18 months ago.
``The Brasholanda acquisition fits the bigger scheme of things in a perfect way, as Van Leer manufactures mainly industrial packaging in South America,'' he said.
Huhtamaki has offered US$974 million for Van Leer. The Amstelveen, Netherlands, company is considering the offer.
Markku Pietinen, Huhtamaki's vice president for corporate communications, said the company plans to build a full portfolio of plastics and paper-based packaging operations in Latin America. He said the latest acquisition provides a solid plastics base, and there is plenty of land at the Curitiba site for expansion.
Pietinen said the company is seeking complementary operations elsewhere in Latin America, and added that Mexico is of particular interest. But he added that he knew of no current negotiations going on in the region.
Apart from its molding capacity, Brasholanda has an engineering division that produces machinery including printing and dairy industry equipment.
``The association with the Huhtamaki group is a step toward globalization and a way to ensure access to state-of-the-art technology, in a world where businesses will be more and more concentrated in the hands of a few high-tech players,'' Busato said.