Citadel Plastic Holdings Inc. has made its fourth plastics deal in the past two years, this time acquiring a Brazilian compounding and injection molding plant from Meridian Automotive Systems Inc.
The 78,000-square-foot plant in Rio Claro employs 94 and produces bulk molding and sheet molding compounds, as well as injection and compression molded parts for the automotive and appliance industries.
No purchase price was disclosed in the deal, which was announced April 9. The site's annual sales also were unavailable.
Radnor, Pa.-based Citadel already makes BMC via Bulk Molding Compounds Inc., the West Chicago, Ill.-based firm that Citadel acquired last year. But the Brazilian site will allow Citadel to produce SMC for the first time, said Chairman and CEO J. Michael Fitzpatrick.
It's a great move for us, Fitzpatrick said of the Brazilian deal. It will allow us to do application development and expand the market both for BMC and SMC.
When you look at the Brazilian market, it's underdeveloped any way you measure it, Fitzpatrick said in an April 10 phone interview.
With the application development work we do at BMCI, we can really do a lot more in that market. The plant is a nice operation with really good efficiency.
Although Citadel's focus has been in compounding, Fitzpatrick said the firm will continue to do molding work at the newly acquired plant to grow its business.
A small BMC plant that BMCI had operated less than a mile away from the Meridian plant in Rio Claro will be closed and consolidated into the Meridian facility. Fitzpatrick said Meridian had ranked as Brazil's largest producer of both BMC and SMC. About two-thirds of the plant's output is devoted to sales of BMC and SMC for outside customers, with a smaller portion going to its own molding operations, which make up the remaining third of sales.
For Allen Park, Mich.-based Meridian, selling the plant will help improve Meridian's overall liquidity position and competitiveness in response to the severely depressed North American economic and automotive environment, President and CEO Richard Newsted said in an April 9 news release.
Meridian also makes SMC in Grabill, Ind., and is increasing production at a new plant in Saltillo, Mexico. The firm also opened an injection molding plant in Hermosillo, Mexico, last year. Meridian had total sales of about $500 million in 2008, with about $155 million of that coming from injection molding, according to Plastics News and industry estimates.
Citadel a unit of private equity firm Wind Point Partners of Chicago entered the plastics market in 2007 by purchasing compounder Matrixx Group of Evansville, Ind. It followed up in 2008 with deals for BMCI and compounder Aclo Polymers Inc. of Cambridge, Ontario. Citadel also in late 2008 sold two Matrixx plants in Italy to an Italian compounder.
Fitzpatrick said Citadel which already ranks among North America's 30 largest compounders hopes to announce additional acquisition deals later this year.
We're looking to do more deals to add to our portfolio, he said. We're always after more technology and a better market position.