Pechiney Plastic Packaging Inc. will secure an important foothold in the fast-expanding Mexico food-packaging market with its agreement to buy leading local extruder and converter Novacel SA de CV of Guadalajara.
The Chicago-based subsidiary of Pechiney SA will pay $90 million for Novacel, which has plants in Zacapu and Guadalajara. The company extrudes polyethylene blown film and does printing and laminating.
Novacel is owned by bakery firm Grupo Bimbo SA de CV and financial group Grupo Arteva SA de RL. Mexico City-based Bimbo said it will remain a major customer under Pechiney. Novacel, which employs 1,000, chiefly serves the food sector, but also makes packaging for detergents, soft drinks and feminine products.
Subject to regulatory approval, Pechiney Plastic Packaging expects to complete the takeover by July or early August, said President Ilene Gordon.
``We are joining forces with a leading player that competes in a packaging market [Mexico] enjoying strong growth of about 6 percent a year. This transaction continues our strategy of expanding globally in selected markets,'' Gordon said.
She added that Novacel is ``an ideal fit'' for PPP Inc., not only for its lead market position, but also because of its financial strength and its focus on value-added packaging. Novacel recorded sales of about $100 million in 2002.
PPP is seeking more acquisitions in Latin America, and currently is looking in Brazil and Argentina, Gordon said. In addition, the company is considering purchases in Eastern Europe.
Bimbo said it sold Novacel to focus on its core bakery business. The company holds about 42 percent of Novacel.
PPP does not plan to make radical changes at Novacel. Gordon, in a telephone interview from the subsidiary's Chicago headquarters, said the company has invested in modern, well-equipped plants.
``We are buying a terrific company with great people. We will invest to grow it in the next two years with some more machinery,'' she said.
PPP makes a range of packaging including single-layer and multilayer films, laminations, bags, thermoformed trays and plastic bottles. PPP's markets are meat and dairy, health-care and food. The company employs 5,000 at 38 facilities around the world and recorded 2002 sales of $1.3 billion.
Gordon said PPP recently invested several million dollars to expand Envaril Plastic Packaging srl in Buenos Aires, Argentina, which makes meat and dairy packaging.
Pechiney has other operations in Mexico including the Cebal Tubes Americas laminate tube facility in Toluca, near Mexico City, and the Techpack International cosmetic and perfume packaging plant in Matamoros, near the Texas border.