Scotland's Low & Bonar plc is selling its North American industrial packaging operations to Hood Cos. of Hattiesburg, Miss., for 80 million (US$128 million). Hood, a privately held company, already has plastics operations, including QPF Inc., an oriented polypropylene film ex- truder, and Southern Bag Corp., which makes polyethylene bags and packaging films.
The Low & Bonar deal includes eight plastic, paper and paperboard packaging plants, mainly in Canada.
The cash sale is subject to approval by L&B shareholders. The Dundee, Scotland-based publicly held company expects the deal to be complete by mid-March.
One packaging analyst said the L&B operations have seen good returns from selling into the United States, due to the relative weakness of the Canadian dollar. But Daniel Cane of ABN Amro in London still agreed with L&B's decision to sell the business.
Cane supports L&B's strategy to withdraw from commodity business areas and expand into more lucrative, value-added segments. He added that the price tag for the business is in the middle of the range that observers expected.
In Canada, the business includes Bonar Inc., with polyethylene sheet and film extrusion, printing and bag-forming lines in Burlington, Ontario, and Calgary, Alberta.
The deal also includes Bonar Packaging Inc., which runs a film extrusion, printing and bag plant in Tyler, Texas. Other operations included in the deal are paper and paperboard plants in Toronto; Guelth, Ontario, and East Angus, Quebec.
The operations employ a total of 850. They reported 1998 sales of 86.7 million ($138 million), and pretax profit of 9 million ($14 million). The plants make paper sacks, bags and laminate packaging for flour, pet food, sugar and cement, and plastic film for salt, fertilizer and chemical packaging.
L&B Chairman John Robinson said the company would invest funds from the sale in other areas with greater growth prospects. L&B's remaining plastics operations include rotational molding operations.
Hood bought QPF, formerly known as Quantum Performance Films, from U.S. Industries Inc. of Iselin, N.J., in November 1996 for $43.2 million. QPF runs a three-line OPP film plant at Streamwood, Ill.
Hood, which also owns lumber, plywood and roofing materials operations, already had owned PE film extrusion and conversion plants in Marengo, Ill.; St Paul, Minn.; and Grand Forks, N.D. That unit, now known as its Hood Flexible Packaging Division, is run by Southern Bag Corp., a multiwall paper bag maker based in Madison, Miss.