In a move that reflects the growth of the bioresins field, Tokyo-based plastics and fibers maker Teijin Ltd. has bought a 50 percent stake in Cargill Inc.'s NatureWorks LLC polylactic acid business.
No purchase price was disclosed in the deal, which was announced Oct. 1. Management at Minnetonka, Minn.-based NatureWorks is expected to remain in place.
NatureWorks has climbed to the forefront of the bioresin market in its five-year history by opening a major plant in Blair, Neb., and by striking deals with mega-retailer Wal-Mart Stores Inc. and other customers looking for ``green'' products.
``NatureWorks is a perfect fit with our strategy of pursuing strategic investments to take our environmental technologies global,'' Teijin President and Chief Executive Officer Toru Nagashima said in a news release.
Teijin posted sales of almost $8.7 billion in 2006 and ranks as a major producer of polycarbonate and polyester films and fibers. Based in Osaka, Japan, the firm employs 19,000 worldwide and has operated a polyester film joint venture with DuPont Co. for several years. Minneapolis-based Cargill is a $75 billion giant in the world of food and agriculture.
In an Oct. 4 phone interview, NatureWorks Chief Executive Officer Dennis McGrew said Cargill ``has the [agricultural] front end well in hand and has strong customer relations,'' but he added that the firm ``doesn't have extensive knowledge in polymer technology and processing and fabricating.''
That's where Teijin comes in.
``Now we can leverage these processes and continue to grow the business,'' McGrew added.
NatureWorks already generates more than one-third of its sales from Asia, and now has the potential to broaden its business in that region thanks to Teijin's large manufacturing footprint there.
``One of the things we want to look at is where to site additional facilities,'' McGrew said. ``Teijin gives us an additional set of options to evaluate.''
In its 2007 fiscal year - which ended May 31 - sales at NatureWorks grew 50 percent over the prior year. The firm does not release financial details, but McGrew said per-pound prices for its PLA material have increased ``in many applications'' during the last year.
``There's now a willingness to pay a green premium, and we're pricing [PLA] according to value,'' he said.
At its plant in Blair, NatureWorks recently increased capacity through a streamlining. The firm also is completing a capital project that will give the plant the ability to run at its full 300 million-pound annual rate by the end of 2008.
``We've been more successful in adding capacity than we expected to be,'' McGrew said. ``Now we've gone back to our customers and told them that we have more material.''
To date, most commercial applications of NatureWorks PLA have been in thermoformed packaging. The firm also has done work in fibers and is increasing its efforts in durable applications, officials said.
NatureWorks was founded in 1997 as a joint venture between Cargill and Dow Chemical Co. Cargill bought out Dow's 50 percent stake in early 2005.
Although several different bioresins are at or near commercial reality, McGrew said he thinks the still-young market has room for each of them.