Resin distributors Channel Polymers and Prime Alliance are combining forces, merging into a new firm that will ship more than 200 million pounds of commodity and engineering resins annually.
The new firm will be called Channel-Prime Alliance LLC. The deal, which is expected to close in June, will give Norwalk, Conn.-based Channel ``a much, much broader supply offering,'' according to General Manager David Skoczen.
``Prime Alliance is very strong in engineering resins like polycarbonate, nylon and acetal,'' Skoczen said by phone April 22. ``Most of [Channel's] work has been in polypropylene, polyethylene and polystyrene.''
Channel, a division of global plastics and rubber broker H. Muehlstein & Co. Inc. of Norwalk, will have majority ownership in the new firm. Des Moines, Iowa-based Prime Alliance currently is owned by President Tom Irvine and other senior managers. The firm was founded in 1981 by Irvine's father, Chuck, who now is retired.
Both Skoczen and Tom Irvine will hold key management positions with the new firm.
Channel - formed by Muehlstein in 1996 to offer just-in-time service to small and midsize customers - did a smaller business in engineering resins, but remarkably shared only one supplier with Prime Alliance. Both firms distribute nylon 6/6 for Solutia Inc.
``There's minimal overlap of active customers and suppliers,'' Skoczen said. ``The big synergy is going to be cross-selling each others' products to each others' customers.
Prime Alliance's lineup of 13 suppliers includes Ticona, Bayer Corp. and DSM Engineering Plastics. Channel's roster of 17 includes ExxonMobil Chemical Co., BP Polymers and Atofina Petrochemicals. Channel also distributes rubber materials for Dow Chemical Co.
The Channel-Prime Alliance deal also makes geographic sense, Skoczen said, since most of Channel's business was focused on the East Coast, while Prime Alliance has a ``midcontinent'' sales base.
Channel does most of its business through public warehousing. Prime Alliance uses that method, but also operates a massive warehouse in Des Moines. Channel has a sales staff of 21, while Prime Alliance has 15 representatives.
On the revenue front, Prime Alliance reported sales of about $80 million in 2000. Skoczen declined to provide financial data for Channel, but said the firm's volume in pounds increased by more than 20 percent last year.
Channel's volume has doubled in the last four years. That type of growth was one of the drivers behind the Prime Alliance deal, Skoczen explained.
``Most resin companies have grown the amount of business they're doing with distributors, and that's creating a lot of opportunity,'' he said. ``They're focusing on superlarge customers and having only six or eight or 10 sellers, whereas before they would have had 25 sellers.''
``[Resin] is a maturing industry,'' Skoczen added. ``Resin companies are looking at their core competencies and outsourcing a lot of other work.''