Film producer Bemis Co. Inc. has taken the first of several planned steps to expand business outside the United States by purchasing a majority share in a large Mexican packaging plant.
The company has bought a 51 percent stake in a Tultitlan, Mexico, facility that had been owned by Masterpak SA de CV. The facility extrudes, converts, prints and laminates film for a variety of products. The remaining share of the facility was bought by a Monterrey, Mexico, holding company owned by the Martin Alba family, said Bemis spokeswoman Melanie Miller.
Minneapolis-based Bemis has two other joint ventures in Mexico that serve the paper packaging and pressure-sensitive materials markets. But outside of a 45 percent stake in a facility in Sao Paulo, Brazil, Bemis had little film business in Latin America, Miller said.
``They haven't had much presence in Latin America compared to some [competitors] like Sealed Air [Corp.] and Avery Dennison [Corp.],'' said equity analyst Ghansham Panjabi of New York-based Lehman Bros. ``It's a good geographic fit. The market in Mexico is developing quickly and becoming more sophisticated in every area.''
The Tuititlan plant has about 300 workers and extrudes film for dry foods, personal-care products, pharmaceuticals and baked goods. The facility recorded sales of about $35 million last year.
Masterpak is owned by Cydsa SA de CV, a large, publicly held chemicals and textiles maker in Nuevo LeÃ³n, Mexico. Cydsa has struggled with its bank debt and has sold several noncore assets. In March, the company signed an agreement with its principal banks to extend debt payments of $192.6 million and update financial commitments. At the time, the company said it would look for other opportunities to increase cash flow.
Masterpak, also based in Nuevo LeÃ³n, will continue to make biaxially oriented polypropylene film and folding cartons at other facilities.
Terms of the deal with Bemis were not disclosed, and Cydsa officials declined comment.
The plant will supply products to Mexico, Bemis President and Chief Executive Officer Jeffrey Curler said in a news release.
The company is looking at Europe as the next spot for expansion, Miller said.
With the growth of the euro as a common currency, many European companies have begun to ship products to neighboring countries, she said. That opens opportunities to provide a higher volume of film on the continent, Miller said.
``It is not quite so national anymore,'' she said. ``It used to be that that a French bakery would buy packaging from a French company and a German bakery from a German company. Now, we're seeing sales throughout Europe, and there's more need for distributors of higher quality [film] that can add to shelf life.''
Less than 20 percent of Bemis' sales come from outside North America, Panjabi said. ``They have great technology, and the challenge is finding the right opportunities overseas to leverage it,'' he said.
Bemis recorded sales of $2.6 billion last year, with more than 80 percent of that coming from its flexible packaging segment. The company ranked first on Plastics News' listing of North American film and sheet extruders for the 2002 fiscal year.