Pannonplast Industries plc has pulled out of plastic pipe production to develop its Eastern European core packaging businesses.
The Budapest, Hungary-based company has sold its 50 percent stake in pipe and fittings company Pannonpipe Kft. of Budapest to co-shareholder Pipelife International GmbH of Vienna, Austria. The deal includes Pannonplast's half share in Pannonpipe's offshoot, Pipelife Romania srl of Bucharest.
As part of the transaction, Pannonplast bought Pannonpipe's Csepel, Hungary, plant, which it will lease to Pipelife.
Pannonpipe, formed in 1990, faced powerful competition in recent years. The company, including Pipelife Romania, ended 2004 in the red on sales of 39 million euros ($48 million). Pannonpipe employs 300 overall, according to Pipelife International.
``With this acquisition, Pipelife consolidates its leading position in Eastern Europe, a region in which the construction industry is expected to grow strongly [through] the next decade,'' said Pipelife Chief Executive Officer Miguel Kohlman.
Pannonplast has been undergoing major restructuring in recent months, including a 10 percent cut in its workforce with the disposal of five small subsidiaries.
``With the `departure' of the two pipe manufacturers, Pannonplast can devote considerably more management resources'' to consumer packaging, Pannonplast said in a news release. Pannonplast also has boosted its custom injection molding business.
Pipelife, itself jointly owned by Solvay SA and Austrian building-materials company Wienerberger Baustoffindustrie AG, also of Vienna, operates 10 plants in Eastern Europe.
Overall, Pipelife has 30 production plants in Eastern and Western Europe, Asia and the United States, where it owns PVC pipe extruder Pipelife Jet Stream Inc. of Siloam Springs, Ark.
Pipelife runs four plants in China, with its operations located close to the country's major growth centers of Shanghai, Canton and the central China city of Chengdu.
The Hungarian joint venture offered its owners benefits in the early stages of the country's market economy, but integration in Pipelife ``now makes much more sense,'' according to Pipelife. The move will be important in developing Pipelife's market position and competitiveness in Hungary and Romania, said Norbert Speiser, chief operating officer of Pipelife Eastern Europe.
Pipelife posted sales last year of 608 million euros ($754 million) and employs 2,800.