Dominant food-services player Libbey Inc. has moved for the first time into injection molding by purchasing a unit of Menasha Corp.
Libbey paid an undisclosed price - estimated by several outside sources at close to $17 million - to buy Menasha's Traex business in Dane, Wis. The unit, with about 100 employees, makes food-storage racks and trays, condiment and lid dispensers, pitchers and salt and pepper shakers.
Libbey, considered by analysts to be the largest North American glassware supplier for food-service items, has not made plastics products until now. The acquisition, completed Dec. 2, positions the company strongly with customers in those product areas, said equity analyst Omarr Aleem of Cleveland-based Midwest Research Inc.
``The market share they can bring with the mix of businesses is impressive,'' Aleem said. ``Something like 80 percent of their existing customers have overlapping accounts [with Traex's products]. They bring a lot of synergies to this, compared to what Menasha had.''
The question remains whether Libbey will expand its position in molding beyond the one Traex plant, Aleem said. Officials with Toledo, Ohio-based Libbey said the company would like to build an important position as a supplier of plastic food-service products sold to hotels, restaurants and other institutional customers.
``Certainly other plastics companies would fit as part of our strategic plan,'' said Kenneth Boerger, Libbey vice president and treasurer. ``We've been very selective in the deals we've done so far, but we've been very successful with them, too.''
The company has added other complementary businesses to its core glassware lines since going public in 1993. The list includes a china and ceramics subsidiary, a metal-flatware company and a glass tableware joint venture in Mexico.
Each time, Libbey has added those products to its distribution network, said Charles Strauzer of CJS Securities Inc. in White Plains, N.Y. The molding operations fits well with the others, he said.
``It's part of the little tuck-in acquisitions they like to do,'' he said. ``They get better purchasing power, higher volumes and lower costs of shipping by sending a whole box of stuff to local distributors. That's been their modus operandi.''
Menasha, based in Neenah, Wis., had less overlap with Traex products. The company owns a host of other plastics businesses, including protective packaging maker Thermotech Co., returnable pallet company Orbis Corp. and engineered polymers producer Poly Hi Solidur Inc.
Menasha officials were traveling and unavailable for comment. But Traex employees were told that Menasha wanted to divest some of what it calls its ``investment companies,'' while growing others. The Libbey opportunity was too great to pass up, said Lori Barger, Traex director of sales and marketing.
In the past, Menasha had refused to look at offers to buy Traex, she said. Traex started in 1977; Menasha bought the business in 1984.
``We've been a very good company for them for many years,'' Barger said. ``But we're going with a great partner.''
Libby will keep the Traex brand name, and the business will be managed separately as a distinct unit, said Timothy Paige, Libbey vice president of administration. However, some purchasing, distribution and administrative functions will be blended with other Libbey operations, he said.
``The business will continue status quo,'' Paige said. ``Certainly, though, there will be opportunities for synergy as the sales people call on the same customers and our credit people and purchasing people deal with the same people.''
Several Traex employees, including Rick Diermeier, general manager, have opted to remain with Menasha, Barger said.
Traex recorded more than $17 million in sales last year, Boerger said. The company has about 16 injection presses molding food-service products, according to sources familiar with the company.
With the acquisition, Libbey has five plants in North America, plus its tableware joint venture in Monterrey, Mexico. The company recorded $419.6 million in sales during 2001.