Tetra Pak is seeking a buyer for its operations that blow mold high density polyethylene bottles.
The company, based in Lausanne, Switzerland, has been shopping the operation since April, said spokeswoman Susan Goldsworthy. The company will retain its plastics-related machinery and closures operations.
Tetra Pak did not make a public announcement of the move but has talked privately with many interested parties, including some competitors, said sources at competing companies familiar with the sale.
The business includes 13 plants in nine countries, many of which are in the United Kingdom, Goldsworthy said. At least two of the plants are in North America: one in Joplin, Mo., and another in Ontario, said those sources.
Goldsworthy would not provide plant locations because many of them are on customer sites, she said.
The HDPE blow molding business records annual sales of around $250 million, sources said. Privately held Tetra Pak does not release those figures.
Tetra Pak claims to be the largest carton manufacturer in the world, supplying many paperboard containers for dairy products, fruit juices and food items on supermarket shelves. Tetra Pak's parent, Pully-based Tetra Laval SA, last year bought machinery maker Groupe Sidel, a maker of injection stretch blow molding machines for PET bottles.
The acquisition of Le Havre, France-based Sidel and a growing paperboard packaging business fueled the desire to sell the blow molding assets, Goldsworthy said. Tetra Pak will continue to make aseptic and nonaseptic filling machines for plastic bottles, but it no longer will provide an integrated system with its own blow molding lines, she said.
``It isn't a big part of our overall business and we didn't think it would become significant in the future,'' she said. ``It did not have a large enough base of business for us to stay in it.''
The shakeout by Tetra Pak comes before an anticipated larger acquisition that is expected to change the rigid packaging landscape. Several sources familiar with the situation said that Owens-Illinois Inc. of Toledo, Ohio, is entering the final stages of negotiations with New York-based equity firm Blackstone Group to buy its plastics blow molding operations for around $1.3 billion.
Those operations include both PET and HDPE bottles. The business generates about $1.2 billion in sales annually for O-I, sources said. The deal could be announced close to July 21, the date that O-I holds a conference call with analysts to discuss its second-quarter results.
The sale, if it happens, would unite O-I's blow molding group with that of Graham Packaging Co. LP, a major York, Pa.-based producer of HDPE bottles that is majority owned by Blackstone. According to those sources, Graham officials already are considering a management team to run the O-I operation and integrate it within Graham.
While not nearly as large as O-I's operation, Tetra Pak's blow molding business has fetched some attention, Goldsworthy said. The company has HDPE blow molding facilities in Latin America, the Middle East and Australia, as well as in North America and England, she said. A majority of those sites make bottles for milk products, she added.
A large, award-winning facility in Missouri might be one of the plums for a buyer, several sources said. The plant serves Joplin-based Jasper Products LLC, a producer of flavored milk and soy products that do not have to be refrigerated.
Jasper used Tetra Pak's system to package a Looney Tunes-branded flavored milk in 2002 for Bravo! Foods International Corp. of North Palm Beach, Fla. Tetra Pak won a DuPont Gold Award for food processing and packaging for the technology.
Tetra Pak will continue to develop retortable packaging for shelf-stable dairy products, using plastics as one material, Goldsworthy said. But in the future, all bottles will be sourced from other suppliers, she said.
Shelf-stable milk products could make Tetra Pak a larger name in the U.S. market, even as it sells some operations, said Timothy Burns, president of private equity firm Cranial Capital LLC of Solon, Ohio.
``That's where milk packaging seems to be going,'' he said.
Tetra Pak had an alliance with York-based Graham Machinery Group - a company with separate ownership from Graham Packaging - to provide extrusion blow molding machines for its HDPE bottles. That agreement expired Jan. 1, Goldsworthy said. Graham officials were unavailable for comment before deadline.
In anticipation of any conflict with its purchase of Sidel, Tetra Pak sold its PET blow molding business in 2002. That business, under the name Dynaplast, mainly was located in Europe, Goldsworthy said.
Tetra Pak's plastics division still will include Novembal, a maker of plastic closures, Goldsworthy said.
According to Tetra Laval's annual report, Tetra Pak recorded 2003 sales of 7.5 billion euros ($9.3 billion) and delivered 105 billion packages worldwide. Those figures do not include Sidel, which reported another 710 million euros ($879 million) in sales.
