Spell Capital Partners has staked out a position in plastics machinery with the acquisition of Brown Machine LLC and Epco Machinery LLC.
Both are part of Pacific Production Technologies, which Spell acquired from Madison Capital Partners for undisclosed terms in a deal announced Jan. 22. Machinery maker Pacific Press Technologies is the other division in the acquisition.
Brown is North America's largest producer of thermoforming machinery for continuous and cut-sheet processes. It also claims to be third-largest globally in the field, after Kiefel GmbH and Adolf Illig Maschinenbau GmbH. Epco remanufactures plastics machinery. Pacific Press is the largest North American firm in hydraulic presses, press brakes and shears. Together, the businesses generate annual sales of about $50 million.
``PPT is our first investment in a capital goods manufacturing company,'' said Spell Capital President Bill Spell in a news release. ``In order to expand PPT, we will work with members of the existing management team and provide the necessary capital to aggressively grow this company,'' he said.
Spell Capital Chief Operating Officer Dobson West said his firm plans no changes at Brown, Epco or Pacific Press Technologies.
``One of the reasons we were excited by the transaction is the extremely strong management team,'' Dobson said in a telephone interview from Spell Capital's head office in Minneapolis. ``They will be able to grow.''
Growth could include acquisitions, according to Brown President Bryan Redman.
Madison Capital decided to sell the businesses because ``my team is ready to move to the next level,'' PPT Chief Executive Officer Mike Stein said in a telephone interview.
Stein said Madison Capital's strength was bringing operational improvements to its three former businesses, while Spell is poised to support their growth. Madison Capital owned Brown and Epco since 1998.
Madison Capital apparently is looking at exiting other plastics machinery businesses. Sumitomo Heavy Industries Ltd. has expressed interest in buying Demag Ergotech and Van Dorn Demag while German press reports indicate that Krauss Maffei AG seems ready to file an initial public offering. Madison Capital has owned those businesses since mid-2006.
Larry Gies, Madison Capital's president and chief executive officer, could not be reached for comment.
Epco is moving from Fremont, Ohio, to Brown's facility in Beaverton, Mich. The company indicated last fall that it would be making the move to share expertise and manufacturing with Brown. Epco President Alice Buechele said the move will be finished Feb. 28, but added that Epco has been in production in Beaverton since the beginning of the year.
The machinery deal parallels Spell's growth in plastics processing. Although Spell subsidiary Victor Plastics Inc. of North Liberty, Iowa, has filed for Chapter 11 bankruptcy protection, Spell's other processing business, Midwest Plastic Components of St. Louis Park, Minn., has been beefing up through acquisition. Midwest recently bought prototyper and short-run molding specialist Dynacept Corp. of Brewster, N.Y., and custom injection molder Peerless Injection Molding LLC of Gardena, Calif., West said.
West said Spell had been in discussions about the PPT deal for several months. About a year ago, Madison bundled Pacific Press, Brown and Epco into PPT. Stein said the merger was designed to pull together businesses that Stein was heading individually. The three businesses can share some engineering and manufacturing.
Spell Capital owns about 74 percent of PPT. Management and other investors hold the rest.
Pacific Production Technologies is based in Mount Carmel, Ill. Madison Capital is in Chicago.