In a deal sealed the week of Oct. 17, Hilex Poly Co. LLC acquired competitor Vanguard Plastics Inc., creating a plastic bag manufacturer with more than $650 million in annual sales.
Terms were not disclosed. The purchase highlights Hilex's plan to grow by acquisition over the next several years, looking for add-ons in the high-molecular-weight high density polyethylene film arena, said Leon Farahnik, chairman of holding company HPC Industries in Los Angeles.
``Definitely if a company fits our portfolio, we will acquire,'' Farahnik said in an Oct. 27 telephone interview. ``We are looking for opportunities.''
At its face value, the purchase beefs up Hartsville, S.C.-based Hilex's agricultural and industrial films business, fortified with a Vanguard plant in Garland, Texas, officials said.
There will be no impact on operations, Vanguard President Larry Johnson said Oct. 24 by telephone. The firms together have 12 plants across the United States.
``All of those will stay intact and plants will continue to function as they have been functioning, under the current management structures,'' he said. However, Vanguard headquarters will relocate from Farmers Branch, Texas, to Hartsville.
Johnson and Vanguard's other managing partner, William Seanor, are set to retire but will stay on as consultants for up to one year. The firm's third managing partner, Carl Reis, died in January 2004. Before his death, management had attempted to sell the firm to a financial buyer, but a deal never materialized, Johnson said.
``The full integration will take place over a reasonable period of time,'' he said. ``We don't want to do anything on a rapid basis. We're moving slow and the Vanguard name eventually will disappear. Meshing together two companies of this size ... we have to make sure we don't jeopardize [relationships with] our customers.''
Farahnik has been involved in plastics packaging since his youth when he began working with his father's plastics business in Iran, according to a company bio. He has been active in the U.S. packaging market since 1979, when Hilex got its start.
The combined firms now will stay focused on growing North American operations, making each one competitive and efficient, rather than pursuing any operations internationally, Farahnik said. But he would not rule out international operations altogether.
``We're very much focused in our facilities here,'' he said ``But you never say `never' in anything. We have no concern with the import situation. We are as good as they are, in my opinion.''
Hilex will add two recycling facilities in the next two years on the West Coast and in the Southeast, he said. It added its first earlier this year at its plant in North Vernon, Ind.
Hilex and Vanguard each have been active on the environmental front, as recycling of plastic bags has become a hot-button issue in states like California. Vanguard, in 2004, joined an existing partnership between recycler Sun Valley Worldwide Inc. of Delray Beach, Fla., and Sigma Stretch Film Corp., to boost bag and film recycling. Also in 2004, Hilex and Vanguard helped form the Progressive Bag Alliance to develop recommendations with city officials on finding waste solutions and educating the public.
``We think we have done a very nice job in cooperation with the Los Angeles City Council,'' Johnson said. ``We are moving those programs forward now.''
Johnson said the group also expects to see results soon from negotiations with San Francisco officials.