PVC Container Corp. is exploring the possibility of selling the company and has hired an investment banking firm to look at alternatives.
The company, a producer of plastic rigid packaging and compounds, wants to generate a plan to enhance growth, PVCC President and Chief Executive Officer Phillip Friedman said in a news release. The publicly held company, traded over the counter, believes its stock is undervalued, he said.
``We are at a very early stage in the process, but we intend to move forward as quickly and prudently as possible,'' Friedman said.
The Eatontown, N.J., company has hired Minneapolis-based U.S. Bancorp Piper Jaffray Inc. to assist with the search. The company's stock traded at $2.48 on May 22, a rise of more than 20 percent from the previous day's closing price. The hiring of Piper Jaffray was announced that same day.
The company had shopped for buyers before enlisting the investment firm, according to several sources close to PVCC. Several packaging players, including container maker Alpla Werke Lehner GmbH and Co., had expressed some interest but backed away before negotiations got serious, those sources said.
The company would like to generate higher returns to satisfy majority owner Kirtland Capital Partners of Willoughby Hills, Ohio, those sources said. The investment firm owns about 65 percent of PVCC.
The company recorded a profit of $261 million in fiscal 2002 after losing money in the two previous years. But sales slipped from $87.9 million in 2001 to $82.6 million for its latest fiscal year, ending June 30.
The company is well-managed but does not have the size or the market valuation to be a major player currently, said Tom Blaige, managing director of Chicago-based Lincoln Partners LLC. Because PVCC's stock is traded on a smaller exchange, it has not attracted much notice from the investment community, he said.
``Not many shares are trading out there, and it's sort of an orphan public company,'' Blaige said. ``It's a very fine business, but a smaller company in a consolidated industry. Its value has been discounted because of its relative size.''
The container maker has continued to broaden its market, moving to the manufacture of PET bottles and preforms during the past several years. The company's core products include bottles that are extrusion blow molded from PVC and high density polyethylene.
The market for PVC bottles and bottle compounds has declined, partly due to solid-waste concerns, the company said in its 2002 annual report. As a market strategy, the company has shifted some production to higher-growth PET bottles for its custom business. Those PET bottles, some of which are transparent, now are produced at plants in Paris, Ill., and Hazleton, Pa.
The New Jersey company also makes PVC compounds and alloys sold through its Novatec Plastics Corp. Inc. subsidiary. Other divisions include Novapak Corp., a blow molded bottle producer, and Airopak Corp., and Marpac Corp., makers of fluorinated and specialty bottles.
The company has eight U.S. plants performing extrusion and injection stretch blow molding and compounding.
A May 16 newspaper report in Ireland said the company planned to shift a Marpac blow molding operation from Ulster to a location in Philmont, Ireland, about 40 miles away. The Philmont operation also houses a Novapak unit, the report said. Together, the sites employ 210 people.
The move will be made during the summer, the report said. The site will give the Marpak operation better access to screen printing and decorative services, Friedman said in the report.
Officials with PVCC and Kirtland Capital could not reached before deadline.