In a rare marriage of materials, Appleton Papers Inc. has acquired Wisconsin-based film converter C&H Packaging Co. Inc. and its sister company, film extruder American Plastics Co. Inc.
The deal, terms of which were not disclosed, moves Appleton for the first time into packaging films, an area the company wants to exploit by using its proprietary technology. The Appleton, Wis., company makes carbonless, thermal, security and digital paper.
``It's a bit of an unusual situation as far as acquisitions go,'' said films consultant Huston Keith of Keymark Associates Inc. in Marietta, Ga.
``You don't see a lot of paper companies buying converters of any size. Usually, they're moving the other direction by spinning off companies.''
But the sale, completed April 30, allows Appleton to diversify from its core paper business, a market that is both mature and declining slightly, said Appleton spokesman Bill Van Den Brandt.
``It's a business that is still a good business, but we recognize that it may not be around forever,'' he said May 1. ``We're looking at ways to grow our company in a manner that complements what we do.''
Changes at the paper maker started in November 2001, when the employees purchased the entire stock of Appleton. The 96-year-old company decided to take two paths for growth: developing new products internally and seeking acquisitions in diverse markets, Van Den Brandt said.
Although both C&H and American Plastics are in northern Wisconsin, less than two hours from Appleton, location was not the primary driver for the purchase, he said. Instead, the companies offer an opportunity to apply Appleton's barrier-coating technologies and use some of the converting processes at C&H, Van Den Brandt said.
One of those technologies at Appleton is microencapusulation, used to make carbonless paper. The process involves the breaking of capsules filled with colorless dies that interact with the coatings on sheets of paper, Van Den Brandt said. The company would like to explore that use with film, he said.
Appleton recorded sales of $898 million in 2002, a decline of about 6 percent from the year before. The company considers itself the world leader in carbonless paper.
C&H prints and converts multilayer film for several industries, including food, household and industrial uses. The company, based in Merrill, Wis., produces stand-up pouches, lidding, specialty films for cheese and other custom packaging.
It also owns Rhinelander, Wis.-based American Plastics, a maker of five-layer coextruded and barrier film that supplies C&H. The companies together employ 145 and recorded about $40 million in sales last year, according to an Appleton news release.
The paper company plans to keep the C&H name and run the company as an operating division of Appleton, Van Den Brandt said. C&H, founded in 1996, was owned by three investors before the purchase.
Several managers have decided to stay with the company, he said.
Paper makers generally do not own film operations, Keith said. Exceptions include Badger Paper Mills Inc. of Peshtigo, Wis., which extrudes film to coat its own paper, and a small division of International Paper Co. of Stamford, Conn., Keith said.
But in packaging, plastics is replacing some paper applications, a move noted by many paper producers, Keith said. ``It may be a way of getting into new markets that are being replaced with plastics,'' he said.