Low & Bonar plc is putting its North American industrial packaging operations up for sale in its continuing switch to higher-margin business.
The businesses on the block include seven plants in Canada and one in the United States that make heavy-duty industrial plastic sacks; form, fill and seal packaging; coated and laminated products; and paper sacks and bags.
The Dundee, Scotland-based company plans to continue to expand its higher-return segments and expects to make acquisitions, possibly in plastics, after it secures fresh funds from the North American disposal, according to Chief Executive Officer Jim Heilig.
This sale follows on the heels of Low & Bonar's purchase of sister U.S. rotational molding companies PDM Molding Inc. of Littleton, Colo., and PDM Molding NW Inc. of Vancouver, Wash. That March deal made Low & Bonar North America's second-largest rotomolder, according to Plastics News estimates.
In addition, Low & Bonar has purchased a carton packaging business from Britain's Waddington plc.
The businesses up for sale generated sales of about £90 million (US$144 million), and include the paper and plastics film divisions of Bonar Inc. of Burlington, Ontario, and Bonar Packaging Inc. in Tyler, Texas.
In Canada, Bonar has polyethylene sheet and film extrusion, printing and bag-making lines in Burlington and Calgary, Alberta. Bonar Packaging operates a film extrusion, printing and bag conversion plant in Tyler.
Other paper and paperboard packaging plants are in Toronto; Guelph, Ontario; and East Angus, Quebec.
Bonar's plastic bags are used to package salt, fertilizer and chemicals. The North American industrial packaging operations employ a total of 850.
Last year, the company reorganized its PE shipping sack production, shifting production from the Tyler plant, which operated more-restrictive in-line extrusion, printing and sack forming lines, to the more-modern Canadian plants, which had available capacity.
This sell-off comes barely a year after Low & Bonar identified industrial packaging in North America as one ``core packaging area for future development.'' Last July, in the midst of reorganizing those operations, the company reported it performed well in the first half of the year despite difficult market conditions.
``We decided this is the right time'' to sell the operations, Heilig said in a telephone interview from his London office. ``We need the funds for new investments.''
Heilig said Low & Bonar had been approached in recent years by a number of potential buyers from Europe and the United States that were interested in the North American industrial packaging operations. He expects a deal to close by September, although the company is only now formally inviting bidders for the businesses.
Heilig said there is a good possibility that Low & Bonar will announce fresh acquisitions, probably in the plastics area, before the end of the year — although perhaps not before the company's fiscal year ends in November.
Heilig added that Low & Bonar has added a new rotomolding line at its West Chicago, Ill., plant since the PDM acquisition was announced.