Shanghai Pret Composites Co. Ltd. is acquiring one of the largest recyclers in the U.S., Wellman Plastics Recycling LLC of Johnsonville, S.C., in an all cash deal.
The $70.451 million (433 million yuan) acquisition includes all shares of WPR Holdings LLC and its subsidiaries Wellman Plastics Recycling LLC and DC Foam Recycle Inc., Pret announced Jan. 6.
According to Pret, WPR's total assets were valued at $73.6 million, with $14.8 million in net assets, as of Sept. 27. WPR's sales reached $162 million in 2012, climbed to $164 million in 2013, and was $124 million for the first three quarters of 2014. Net profit was $7.6 million in 2013 and $6.1 million for the first three quarters of 2014.
An aggressively growing automotive compounder in China, Pret said it hopes to secure a presence in the auto compounding market in the U.S. through this acquisition.
It also aims to leverage WPR's technology and expertise in compounding with recycled materials, Pret added.
This move will be the company's “starting point” with continued efforts to expand globally, Pret noted.
Wellman's Engineering Resins division produces nylon, polyester and polypropylene resin products for the automotive industry made from 100 percent post-consumer recycled materials.
Wellman also operates a PET recycling division that supplies pellets for the production of beverage packaging and PET straps, Pret said.
WPR was reportedly planning a $5.5 million expansion of its 2 million-square-foot facility at its headquarters in Johnsonville in 2013.
WPR was formed in 2008 following the bankruptcy and eventual dissolution of Wellman Inc., which had been one of the world's largest PET recyclers. The latter employed more than 2,000 in its heyday.
WPR is ranked by Plastics News as the fourth largest recycler in North America, reprocessing 400 million pounds of plastics annually.
Pret reported 1.4 billion yuan ($225.3 million) in sales in the first nine months of 2014, up 22.4 percent year-on-year. Net profit grew 11.4 percent to 153 million yuan ($24.6 milliion). Consolidated gross profit margin was 18.6 percent for the first three quarters and expected it to benefit from plunging oil prices in the fourth quarter.
Pret now has three production bases, including one at its Shanghai headquarters and two facilities in Jiaxing in East China and in Chongqing in West China.
The Wellman acquisition was made through Pret's wholly owned investment arm, which formed last year in Shanghai.
Exempt from government approvals, the deal is currently being reviewed by the Shenzhen Stock Exchange, where Pret is listed. The company expects to resume trading within 10 business days.