Flavored-water company American Water Star Inc. has a letter of intent to buy a Kansas injection molding facility with plans to produce their own bottle caps, adding it to a previous acquisition of a liquid pouch packaging firm.
Few details are available yet on the proposed purchase of privately owned Prime Plastics Inc. of Winfield, Kan. Prime Plastics already is one of the largest suppliers of caps to publicly traded American Water Star of Las Vegas.
American Water Star contracts with regional bottling companies to produce its nonsugared flavored-water products and must supply its own bottles, caps and ingredients, said Donald Hejmanowsky, director of shareholder relations, in an Aug. 21 telephone interview.
``This acquisition will dramatically improve gross profit margins by reducing the cost of goods in this production area,'' said Chief Executive Officer and President Roger Mohlman.
The companies expect to complete the transaction within 60 days.
In December, AWS bought American Distribution & Packaging Inc. for $2.6 million. The Nevada business processes ``mini-sip'' pouches that American Water Star uses for its new line of sugar-free alternatives to children's juice drinks.
AWS is in the midst of a growth plan, which also has it signing on distributors nationwide to get its drinks out to a wider audience, Hejmanowski said. It will be looking at other business deals needed as it expands, with a focus on national manufacturing, distribution and sales groups.
AWS plans to expand to $30 million in annual sales. It posted more than $1.7 million in sales for the first six months of 2003, according to reports filed with the Securities and Exchange Commission, but was just entering the height of its sales year with new product launches and distribution regions coming on board.
American Water Star markets drinks under the Power Punch, Hawaiian Tropic, Geyser Fruit and Cool Luc brand names.