Diversified manufacturer Tyco International Ltd. entered specialty, high-value films by acquiring the operations of World Class Film Corp. on July 23. Terms were not disclosed. Separately, Tyco has agreed to buy British plastics film manufacturing operations run by Macfarlane Group plc.
The World Class acquisition gives Tyco a position in high-end and coextruded films for sale to the converter market and, potentially, pits the conglomerate as a direct challenger to big film makers such as Pliant Corp. of Salt Lake City and Bemis Co. Inc. of Minneapolis.
Tyco plans to expand the acquired businesses and has no plan for consolidation, said Stephen McDonough, president of Tyco Plastics and Adhesives Group in Nantucket, Mass.
Aside from new markets, an attraction of World Class is new technology that Tyco can leverage into its other film operations, he said in a telephone interview.
Other Tyco acquisitions in recent years have involved less-demanding film and sheet technologies for agricultural, consumer packaging, stretch film and trash bag applications.
World Class Film operations include the headquarters site in Yonkers, N.Y.; Barrier Films Corp. of Sparks, Nev.; Northwest Films Inc. of Vancouver, Wash.; and Flemington Film Products of Flemington, N.J.
World Class acquired Barrier in 1997 from Outlook Group Corp. of Menasha, Wis.; Northwest in 1998 from Portco Corp. of Vancouver; and Flemington in 1994 from Tredegar Industries Inc. of Richmond, Va.
Two brothers, World Class Film executives Ron and Yoram Shemesh, have invested heavily in upscale equipment for multilayer blown and coextruded films.
The Barrier operation under President Bill Wright processes engineering thermoplastics such as nylon, polyester and ethylene vinyl alcohol copolymer for multilayer applications and proprietary modified-atmosphere packaging films.
Wright brings significant technical expertise to Tyco. Northwest Films operates coextrusion and blown film lines.
World Class Film reported 1999 sales of $54 million for the Yonkers, Sparks and Vancouver film extrusion sites, which together employ 156. The operations have 20 lines processing 72 million pounds of resin annually. World Class ranked 71st on the most recent Plastics News list of North American film and sheet manufacturers.
The World Class operations will be part of the Tyco Plastics and Adhesives Group.
Macfarlane of Glasgow, Scotland, decided to sell its plastics film business because its bid for rival British Polythene Industries plc failed late last year. Macfarlane wanted a leadership position in film that required bigger economies of scale, the firm explained in an Aug. 17 news release. Selling the film operations will maximize their value to shareholders and help pay down debt, the company concluded.
Macfarlane will, however, keep its injection molding business in Ireland. A spokesman estimated that Macfarlane shareholders will vote on the agreement in about three weeks.
Tyco agreed to pay $70 million on a debt-free basis for Macfarlane's film business. Macfarlane has been cutting costs in the business and recently closed three plants for annual savings of £1 million ($1.43 million). The business had sales of £30.8 million ($44 million) and profit of £2.2 million ($3.15 million) for the six months ended June 30. Both figures were down slightly from a year ago.
Macfarlane's film strategy was to grow through acquisitions. Its most recent purchase was United Polythene Ltd., a converter in Oxford, England, that it bought in the second quarter for £1.2 million ($1.72 million). Following its failed pursuit last year of British Polythene, Macfarlane sold its residual stake in the film major on Aug. 3 for £6.5 million ($9.29 million).
Earlier Tyco plastics-related acquisitions included Mohawk Plastics Inc. of Riviera Beach, Fla.; Amcel Corp. of Watertown, Mass.; North American Plastics Corp. of Aurora, Ill.; Sunbelt Manufacturing Inc. of Monroe, La.; Carlisle Plastics Inc. of Phoenix; and most of Armin Plastics of Jersey City, N.J.
Over the years, World Class Film has had a close relationship with converter Excelsior Transparent Bag Manufacturing Co. of Yonkers. McDonough said Tyco is not interested in buying Excelsior, whose West Coast plant in Vancouver is in the same building with Northwest Films.
Tyco was doing about $900 million in film business annually before the purchase. Parent firm Tyco International reported sales of $28.9 billion for the year ended Sept. 30. Tyco International, in Pembroke, Bermuda, has administrative offices in Exeter, N.H.