AEP Industries Inc. will buy the assets of flexible packaging maker Transco Plastics Industries Ltd. for about US$5.3 million.
AEP and its AEP Canada Inc. subsidiary will acquire Transco's machinery, equipment and related assets. The company will gain about $30 million in annual net sales from Transco's former customers, according to a news release from AEP.
The deal is expected to close in the next two weeks.
Transco operates one plant at its headquarters in Montreal and has about 150 employees. AEP plans to relocate manufacturing from Transco to AEP facilities throughout North America, according to the release.
AEP has 11 plants in the U.S. and one in West Hill, Ontario.
“This is a compelling investment opportunity for AEP that will gain meaningful business to our company and deliver a solid return on invested capital,” said Brendan Barba, AEP chairman, president and CEO, in the release.
“With Transco we will expand our already-robust presence in the plastic packaging industry and enhance our suite of products.”
Transco makes retail and industrial packaging, shrink films, bags and mailers, and offers extrusion, conversion and printing operations at its plant. The company reported sales of about $74 million in 2011, including $56 million in plastic film and sheet sales, according to Plastics News' survey of North American film and sheet makers.
The acquisition is AEP's second in about a year. In October 2011 it announced its acquisition of Webster Industries Inc., a maker of private-label food and trash bags, for about $26.7 million, according to filings with the Securities and Exchange Commission. That deal pushed up AEP's annual sales to about $1.2 billion.
AEP of South Hackensack, N.J., manufactures packaging films for consumer, industrial and agricultural markets. The public company reported sales of $291.9 million in the third quarter of 2012, up from $246 million in the year-ago period.
