RICHMOND, VA. (Oct. 17, 2:45 p.m. ET) — Tredegar Corp. is expanding its films reach in Latin America, buying Terphane Holdings LLC, a manufacturer of specialty polyester films headquartered in
Richmond, Va.-based Tredegar, a maker of polyethylene and polypropylene films and aluminum extrusions, will pay London-based Vision Capital Partners LLP $188 million for Terphane, using available cash on hand and financing from Tredegar's existing $300 million credit facility.
The deal is scheduled to close later in October. Officials from Terphane referred a request for comment to Tredegar. Officials in
In the past 12 months, plastic film accounted for 70 percent of Tredegar sales and a slightly higher percentage of earnings, Timothy Hayes, a research analyst at Davenport & Co. LLC in
The Terphane acquisition diversifies Tredegar's film offerings into more areas of food packaging in addition to the company's presence in diapers and other personal care products, as well as films for flat screens (from its Bright View Technologies Corp. subsidiary in Morrisville, N.C.), he said.
“This is a sizable acquisition for Tredegar,” Hayes said. “Strategically, this [deal] puts them into films that are in a non-cyclical market — it makes sense.”
John Hart, plastics and packaging group director at P&M Corporate Finance LLC in
“This is an example of a strategic buyer deploying capital in a focused way,” he said. “[Tredegar] did not have much presence in food packaging, and this [acquisition] moves them into that space.
“This also gives Tredegar more presence in
In an Oct. 17 news release, Nancy Taylor, Tredegar's president and CEO, said her company had sought an acquisition that met Tredegar's goals for market expansion and customer and product diversification.
“Terphane's high-value, differentiated products will extend our product offerings into adjacent specialty films markets and allow us to expand in
In a note to investors, Davenport & Co. gave Tredegar a continued neutral rating, based in part on Tredegar management's prediction that low consumer confidence, high resin prices and competition in value-added products markets will continue to exert pressure on its personal care and surface protection businesses into early 2012.
For the second quarter of 2011, Tredegar reported profit of $5.7 million on sales of $201 million, compared to profit of $4.9 million on sales of $185 million for the year-ago period.
Terphane operates manufacturing facilities in Cabo de Santo Agostinho,
Formed as Rhone-Poulenc Films in 1976 to import polyester films from
Between 1998 and 2001, Terphane invested about $9.5 million in its business, with close to $7.1 million going toward new equipment, including polymerization coating, metalizing and slitting. Terphane claims overall production capacity of 44,000 tons annually.
“Terphane is an example of a Brazilian company that has grown its business and established a footprint in
Tredegar had sales of $740 million in 2010. With approximately 2,000 employees, the company operates 11 plastic film plants in the