A Burlington, Mass.-based private equity firm has bought and merged two shopping cart and materials-handling products makers.
Woodside Capital acquired both Rehrig International Inc. in Richmond, Va., which injection molds carts and baskets, and United Steel & Wire Co. in Battle Creek, Mich., which had a small plastics operation to complement its wire cart business.
Terms of the deal, which closed May 7, were not disclosed.
The merged company's name is Rehrig United International. It will be based in Richmond.
Rehrig is the market leader in the plastic cart business, said Benjamin Procter, a partner at Woodside Capital, in a May 9 telephone interview.
The combined entity is among the three largest domestic manufacturers of shopping carts, Procter said.
``The market continues to demand a wide variety of basket and chassis materials,'' said Vincent Gurzo, the combined companies' president and chief executive officer, in a news release.
``Plastic has taken a hit recently in the industry. There was a period where the majority of carts sold were plastic, rather than metal wire. That trend has reversed over the last several years,'' Procter said.
Several large retailers in the industry ``made a decision to go at least partly plastic a number of years ago, but have since reverted back to mainly wire. That changed the dynamics of the industry.''
About 2.5 million shopping carts are sold each year in the United States, he said.
Combining United Steel with Rehrig is a case of ``two challenged businesses coming together to make a much stronger one,'' he said.
As the retail industry has consolidated in the past five years, store shopping carts have become much more commoditized. While plastic carts offer advantages like mitigating parking lot vehicle damage and corrosion resistance, the cost of retooling for different-sized carts is very expensive compared to fabricating new sizes of metal carts.
Those industry changes as well as the increasing cost of plastic resin have been challenging for Rehrig, which is credited with inventing the plastic shopping cart. United was challenged because of its size as a family-owned business and its geographic location, Procter said. The injection molding operations of United in Battle Creek have been shut down. Presses and tooling will be transferred to the Richmond plant.
Investors feel the combination of the two firms will give them a competitive edge moving forward.