Dart Container Corp. is buying rival Solo Cup Co. for $1 billion in a deal that will creat a company with estimated combined thermoforming sales of $1.27 billion and total sales of more than $3 billion.
Solo CEO Robert Korzenski said in a news release that the acquisition is “putting the company in the right hands to succeed and grow going forward.”
Solo, which turned 75 last year, has struggled since it bought competitor Sweetheart in 2004. The Lake Forest, Ill., firm had problems integrating the purchased company into its own operations and began losing money.
In 2007, Solo sold part of its business to New York investor Vestar Capital Partners IV LP.
“Dart Container's acquisition of Solo will accelerate the progress Solo has made to improve its levels of service and customer support,” said Dart Container CEO Robert Dart in a news release.
“We will use our expertise in running a successful, efficient, reliable and service-oriented company to create an organization that blends the best of both Dart and Solo for the benefit or our customers.”
Mason, Mich.-based Dart and Solo are big players in plastic and paper single-service goods. They run extensive thermoforming operations, totaling 25 in North America, making cups, plates, cutlery, straws, bowls, takeout containers and goods made with recycled and compostable content.
Solo has closed several plants in recent years and laid off more than 1,000.
Dart, a family company, has the freedom needed to “integrate Solo in a thoughtful, analytical manner to ensure lasting success,” said Robert Dart.
One insider who asked not to be named said Solo is burdened with bureaucracy that adds 3 cents or more per pound of resin it buys.
Solo is the second-largest thermoformer in North America, with estimated related sales of $790 million, according to a recent Plastics News ranking. Dart is the third-largest, with thermoforming sales of $480 million. Pactiv Foodservice is the dominant player, with thermoforming sales estimated at $3.2 billion.
Jim Lammers, Dart vice president of administration and general counsel, said Solo's stake in paper packaging is a main driver to the proposed purchase, expected to be completed in the third quarter.
“We're not going to rush into decisions such as consolidation,” Lammers said in a telephone interview. “We need to get to know Solo better. We will need a lot of Solo plants and personnel, and there will be synergies.”
Dart's foam beverage cup business took a potential blow last week when McDonald's Corp. said it might have found a replacement for polystyrene foam hot-drink cups.
Dart is the largest maker of EPS cups in North America. Solo only makes EPS cups in Huntington, England, for local markets but it also recently launched its line of Trophy Plus dual-purpose PS cups in North America for hot and cold beverages.