Appleton Papers Inc. will sell its Performance Packaging business to a newly formed company named NEX Performance Films Inc. for $58 million.
In a July 8 news release, Appleton, Wis.-based Appleton said the sale is a strategic move to consolidate its offerings and to allow the company to focus on its core business of specialty paper manufacturing, and that the deal is expected to close this month.
Appleton intends to use proceeds from the sale to reduce debt and for general corporate purposes.
Our core strengths in specialty paper production and microencapsulation have been the foundation of our company's success for more than a century, and they will be the focus of our growth strategy in the future, Appleton CEO Mark Richards said in the release.
According to recent Securities and Exchange Commission filings, the Performance Packaging business posted a 2009 loss of $2 million on $99.8 million in sales, about 12 percent of Appleton's $862 million in total sales for 2009. The packaging division's sales were down about 11 percent from 2008, which Appleton blamed on weak demand and lower selling prices due to decreases in resin costs.
NEX Performance Films is owned by Mason Wells, a Milwaukee-based private equity firm. Mason Wells' plastics-related holdings include Oliver Products Co. of Grand Rapids, Mich, a converter of plastic films for food-service and medical packaging; and Coatings Excellence International LLC, which has wide web extrusion coating and laminating capabilities and makes woven polypropylene bags in Wrightstown, Wis.
We want to build a leader in the films industry to supply converters with the highest-quality film out there, Greg Myers, managing director of Mason Wells' buyout funds, said in a July 9 telephone interview. We bought the [Appleton] business based on its history of excellence in performance films and are backing the current management to run it.
NEX Performance Films could add assets including machinery and other production facilities perhaps though more acquisitions in the next 60 days, he said.
Appleton's Performance Packaging operations produce single and multilayer polyethylene films and are divided between extruders American Plastics Co. Inc. of Rhinelander, Wis., and New England Extrusion Inc. of Turners Falls, Mass., which has plants in Turners Falls and in Milton, Wis.
Appleton in April 2003 acquired American Plastics Co. and flexible packaging manufacturer C&H Packaging Co. Inc. of Merrill, Wis. Appleton sold C&H to Interflex Group Inc. of Wilkesboro, N.C., in December 2009 for an undisclosed sum. Appleton acquired New England Extrusion in January 2005.
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