Chesapeake Corp. is making its first major foray into plastics packaging, agreeing to buy Boxmore International plc for 191 million ($312 million). The cash deal will make Richmond, Va.-based Chesapeake a major player in the European plastic bottle and specialty folding-carton markets.
Boxmore, which is based in Newtownabbey, Northern Ireland, blow molds polyethylene and PET bottles at plants in England, Ireland, France, Belgium, Germany, China, South Africa and Northern Ireland. The company also makes labels, leaflets and cartons.
Boxmore was formed and run by the Ennis family, but went public in 1989. The company has expanded rapidly into mainland Europe and China in recent years. More recently, it had considered major new acquisition plans for its carton and PET packaging businesses. But lack of investment funds have inhibited such growth, said Chief Executive Officer Mark Ennis.
"If our shares had been valued higher we would have been out making acquisitions. The next stop for us was America. But Chesapeake was better supported by the institutions than we were and they got in first," Ennis said.
He admitted that in some areas, such as PET food and drink containers, Boxmore had pulled back from making acquisitions in Europe also because of overcapacity in the marketplace.
"Given the poor investor sentiment toward smaller companies, and in particular those within the packaging sector, we believe that Chesapeake's offer provides Boxmore with an excellent opportunity to facilitate further growth," Ennis said.
In 1998, Boxmore reported pretax profit of 13.6 million ($22.5 million) on sales of 107 million ($177 million). Results for 1999 were not yet available.
In a news release, Chesapeake President and CEO Thomas H. Johnson said his company is committed to the specialty packaging market and has positioned itself to be an industry leader.
Last fall Chesapeake accelerated its transformation from a forestry and paper group to the specialty packaging sector when it sold its timberland holdings and completed the transfer of its tissue-paper business to a joint venture with Georgia-Pacific Corp.
Chesapeake reported 1998 sales of $950.4 million.