Low and Bonar plc is selling its rotational molding division, Bonar Plastics, including four plants in North America, to Icelandic industrial company Atorka Group hf for about £25.8 million ($45 million).
Combining Bonar and Atorka will create one of the world's biggest rotomolding companies, with combined sales approaching 140 million euros ($166 million).
L&B, based in London, intends to concentrate on its more profitable flooring and polypropylene yarns and fabrics businesses.
The acquisition by Atorka offshoot Promens hf is expected to be completed following approval by L&B shareholders in late August.
Promens Managing Director Geir Gunnlaugsson said it is too early to say what changes are in store for the Bonar operations. The acquired businesses will be integrated gradually with Atorka Group's rotomolding business, Saeplast, he said in a telephone interview.
``You should not expect a revolution - more a gradual process of evolution,'' he said.
Gunnlaugsson pointed to clear differences between the two organizations, including corporate cultures and the size of the plants. Saeplast's biggest plant has four molding machines, while he said Bonar has huge facilities. Saeplast has focused on proprietary products, while Bonar has a strong custom molding background.
He said the deal gives Promens ``very good worldwide coverage,'' and a strong base for future growth. But the company wants to continue to improve productivity, a process that has been ongoing at Bonar.
``There is work still to be done in both organizations. But we need to look closer before making decisions,'' Gunnlaugsson said.
Promens wants to be the No. 1 supplier of containers to global materials-handling markets, he said. The company will have plants in 12 countries.
Bonar Plastics operates 12 rotomolding plants, including in West Chicago, Ill.; Littleton, Colo.; Ridgefield, Wash.; and Lindsay, Ontario. In Europe, the company has eight plants: in Bethune, Montoir de Bretagne and Huningue, France; SÃ¶rum, Denmark; Hockenheim, Germany; Deventer, the Netherlands; Barcelona, Spain; and Miedzyrzecs, Poland.
Bonar Plastics employs 1,100 and generated profit of £1.2 million ($2 million) in 2004, up 7 percent from a year earlier, on sales of about £59 million ($102 million).
Bonar Plastics supplies materials-handling products including intermediate bulk containers and pallets. It is an established custom molder, serving the automotive, marine and point-of-sale sectors. The firm has supplied the off-road vehicle segment with more than 1.5 million fuel tanks, fenders, roofs and other external and internal trim components.
It also makes products for the playground equipment, outdoor furniture and mail sorter markets.
Atorka is based in Reykyavik, Iceland. Saeplast was founded in Dalvík, Iceland, in 1984. The unit molds double-walled insulated containers, aimed chiefly at the fishing industry, but increasingly used to preserve food.
Saeplast, also a producer of marine floats and safety equipment, has molding units in Norway, the Netherlands, Spain, Canada and India.
In May, Atorka formed the Promens subsidiary to run a group of the Saeplast molding and sales operations. That group includes plants in Iceland, the Netherlands, Spain, and a 63 percent stake in Saeplast India Ltd. in Ahamadabad, India.
Promens also now runs Saeplast Asia's sales offices in China, which are in Hong Kong and Zhuhai.
Promens is seeking opportunities to supply the growing fish-farming sector in southern China, as well as studying whether to establish a production plant in China, according to Promens.
Meanwhile, Saeplast still owns some rotomolding operations that are not part of Promens. Those include fish and meat tub molder Saeplast Canada Inc. in St. John's, New Brunswick, and two businesses in Norway.
As long ago as 2002, L&B said it was considering selling the plastics molding unit.
That decision followed its restructuring of Bonar Plastics' European operations, as well as layoffs and other cost reductions in North America.