The Chicago-based division of Pechiney SA is interested in niche packaging markets including health care, personal wipes and dairy products, PPP President Ilene Gordon said June 18 in London.
``And/or we could be looking at acquisitions that are in low-cost regions, some in perhaps, say, Tunisia or Morocco that could be interesting, or in Eastern Europe,'' Gordon said.
``We have a specialty [packaging] films facility at Skrivany, the Czech Republic, that we would like to expand, and we would be looking at other companies in Eastern Europe. The Czech Republic's been a success in terms of labor cost,'' she said.
In addition, she said, Pechiney is looking at making a flexibles acquisition in the United Kingdom, where Pechiney has bottle operations and already has flexibles customers.
Discussing the choice of acquisition opportunities, Gordon suggested Europe offers smaller niche-market possibilities that might give good value.
``It's a matter of getting value for our money and the energy it will take [to integrate an acquisition]. A lot of small niches take a lot of energy. On the other hand, [there is a need] for restructuring major acquisitions,'' she said.
Pechiney is looking simultaneously at a number of opportunities to expand externally, she said.
``I'd say within the next 12 months we will make some of them happen. It's only a matter of timing and priority. We have identified what would be a good fit,'' she said.
Gordon also made clear that PPP is looking at takeover opportunities in South America as an early priority, following its November 2001 purchase of meat and dairy flexibles firm Envaril Plastic Packaging srl of Buenos Aires, Argentina.
Top Pechiney officials were in London for a meeting with investment analysts. Their biggest news was not plastics-intensive, but did have a strong packaging angle: Officials said they are preparing a takeover offer for the flexible packaging business of VAW Aluminium AG, Europe's third-largest flexible packaging company.
Oslo, Norway-based conglomerate Norsk Hydro ASA bought VAW in March. At the time it made clear it planned to sell the Bonn, Germany-based company's flexible packaging division when market conditions improved.
A VAW spokesman confirmed the disposal process is under way, with a sale expected by the end of the year.
Pechiney not only is keen to boost its packaging position within Europe, where it is ranked fifth in flexibles, but aims to expand its presence beyond the Americas and Europe. VAW also runs a number of flexibles production facilities in China and several other countries in Southeast Asia.
Last year PPP doubled its European size at a stroke with the acquisition of midsize player Soplaril SA of Suresnes, France.
Soplaril, with sales of about 200 million euros (US$170 million) and seven packaging plants across southern Europe, gave PPP new strength in fresh-fruit packaging and stand-up pouches.
While cautious in its approach to any major purchase, Pechiney wants to take advantage of acquisition opportunities, said Christel Bories, senior executive vice president for packaging for Paris-based Pechiney.
``VAW will soon be offering its flexible packaging business for sale. Of course, we will look at that opportunity.
``We know there are some good things and some weaker parts [to its operations], and we want to make sure we make the right choice,'' Bories said.
``We will only make an offer if we think we can turn around those weaker spots,'' she said.
Later, Bories suggested that Pechiney is most interested in VAW's pharmaceutical packaging position and its established place in Asia, while Pechiney only has one operation in New Zealand.
``They are not the only [acquisition] opportunity. There are other, midsize opportunities in Europe like Soplaril [that we are considering],'' she said.
A year ago, VAW expanded in both Asia and Turkey with its purchases of majority holdings in leading Rotopak Matbaacilik-Ambalaj A.S. of Tuzla, Turkey, and in the top regional flexible packaging supplier in Beijing, joint venture VPS Beijing Propack Co. Ltd.
The German group already owned Propack International Holdings Ltd. of Hong Kong, with the Propack Huizhou Plastic and Propack Jiangying facilities elsewhere in China. In addition, VAW runs plants in Indonesia, Thailand and the Philippines.
Today, PPP is a major world player, with 2001 sales of $1.2 billion. In addition to flexibles, the company is a top supplier of blow molded barrier bottles for food, including syrup and beer bottles. In Europe it has 13 flexibles plants in France, Spain, Italy, Portugal, Germany and the Czech Republic and two bottle plants in the United Kingdom.
In North America, PPP runs 15 flexibles plants following a string of acquisitions - most recently including coated medical films converter Phoenix Heath Care Products LLC of Milwaukee.
Through other packaging subsidiaries, Pechiney has the No. 1 global position in collapsible tubes, plastic and metal cosmetic packaging, and aluminum aerosol cans.
Commenting on Pechiney's interest in VAW's flexibles operations, London-based packaging analyst John Middleton of ABN Amro bank said Pechiney would do better looking at the fragmented industry below the top few players and going for a niche acquisition. But he admitted that a VAW buy would offer Pechiney greater economies of scale in purchasing, among other benefits.