Thermoformer Solo Cup Co. is expanding into Asia through the purchase of Tokyo's Sanyo Pax Co. Ltd., in a deal worth more than $16 million.
The move will give Solo five manufacturing plants in Japan and an operation with estimated annual sales of $100 million.
It also provides the Highland Park, Ill.-based company with solid footing to expand throughout Asia, said Chief Financial Officer Ronald Whaley.
"We've been looking for the right opportunity," Whaley said in an April 16 telephone interview. "This has been a long process."
The purchase plan calls for Solo to buy a minimum of 66.7 percent of Sanyo Pax's estimated 4.4 million shares, with the potential of buying all the shares.
Solo will pay 700 ($5.67) per share for Sanyo Pax stocks, which sold at about ¥550 ($4.46) per share before the announcement. Sanyo Pax directors already have agreed to the buyout. Solo is slated to wrap up the deal by May 18.
Sanyo Pax's products and operations closely match Solo's offerings, Whaley said. Solo Cup plans to keep the bulk of Sanyo Pax's leadership in place as it takes over the Japanese company.
Plastics News estimates Solo Cup's total sales at more than $734 million annually and ranks it as North America's second-largest thermoformer. The company currently has no production in Asia but exports some products to that region. The privately held company would not disclose how much of its annual sales are generated in Asia.
"We have quite a few sales there now, but we will be able to expand on it with [Sanyo Pax]," Whaley said.
With the Japanese holdings, Solo Cup will be an exception among packaging companies, noted Lloyd Widom, a packaging industry analyst for Credit Suisse First Boston in New York.
"There's very, very little [U.S.] production in Japan," he said.
In general, the cost of shipping product from the United States offsets any major opportunities for sales in that country, Widom said.
"There has been some technical licensing, some affiliations, [but mostly, Japan] has pretty much been a closed market," he said.