MedPlast Inc., a 4-year-old medical molder and contract manufacturer, has finalized a long-rumored acquisition of contract manufacturer United Plastics Group Inc.
The deal, announced April 4, gives MedPlast the presence and plants it sought in China and creates a company with more than $250 million in sales — roughly 60 percent of them in medical — and 15 plants worldwide with a combined 900,000 square feet.
UPG has plants in Mexico and Wales, four plants in the U.S. and four plants in Suzhou, China. All five of MedPlast's current locations are in the U.S.
“China is a shining star for us,” said Matt Langton, UPG vice president of sales and marketing. “It is one of the most important calling cards we have,” with 175,000 square feet of manufacturing space that accounts for one-third of the firm's overall sales and 50 percent of its medical business.
Just last June, Mike Farrell, MedPlast's executive vice president of sales and marketing, said the company wanted to make an acquisition in the next 12 months and to add its first plant outside the United States. In January, rumors began about a deal between the firms. Insiders said MedPlast had received more than seven bids from potential buyers, and the deal had been sealed in late December.
Medplast, based in Tempe, Ariz., was formed four years ago by former Milacron executive Harold Faig through the purchase of two medical companies. MedPlast's medical business focuses largely on hand-held, single-use surgical instruments and diagnostic devices geared to its capabilities in rubber, plastic and silicone — as well as overmolding, two-shot and thermoplastic molding.
The company has a total of 220 presses, from 28-1,000 tons, at five plants, in Monticello, Iowa; Westfield, Pa.; Elkhorn, Wis.; West Berlin, N.J.; and Tempe.
Worldwide, UPG has more than 300 presses, from 24-1,000 tons. Medical makes up roughly 40 percent of the firm's sales; the rest is about equally divided among electronics, consumer and industrial products, with some custom automotive business. Medical accounted for roughly 85 percent of MedPlast's sales in 2011.
The acquisition also gives MedPlast precision mold making in China and North America.
“The combination of MedPlast and UPG represents tremendous opportunities for both firms and for our customers,” MedPlast CEO Harold Faig said in a statement. He said the acquisition boosts the firm's position “as an integrated, one-stop supplier” in health-care and non-medical product markets.
In addition to a China presence, the other driver for the acquisition was the pairing of complementary technologies, said Langton. “UPG brings a wide range of value-added capabilities to the table including partial- and full-assembly, contract sterilization, lab services [and] global supply chain logistics management.”
MedPlast's capabilities include injection molding, blow molding, silicone extrusion, compression and transfer molding, liquid injection molding, two-shot molding, multicomponent molding and precision mold making.
The acquisition continues a trend of contract manufacturers merging and making acquisitions to grow in size and gain geographic presence.
“The two biggest drivers are that big OEMs are asking contract manufacturers to be closer to their own manufacturing locations, and that OEMs are looking to reduce their suppliers and also want suppliers that are more vertically integrated,” said Mark Bonifacio, president of Natick, Mass.-based Bonifacio Consulting Services LLC. “We will see contract manufacturing organizations emerge that have more scale and that have sales of several hundred million dollars.”