UPDATED — Amcor Ltd. has purchased Encon Inc.'s preform manufacturing business, a Dayton, Ohio-based company with sales of about US$110 million.
Amcor is paying US$55 million for the company's manufacturing assets and intellectual property, known as Eco-Groupe Inc. The company has four plants — the largest in Dayton, with others in Texas, Washington and Hawaii.
Amcor and Eco-Groupe have been competitors in the preform injection molding business. Melbourne, Australia-based Amcor announced the deal on Oct. 27.
Encon is known for being a woman-owned molding and tooling business — a rarity in the plastics industry — and for its role as a pioneer in developing PET bottles. And the business actually will continue to be both woman-owned and a tooling supplier after the Amcor deal, which may be a plus for some customers.
Amcor is buying a minority stake in EnKon LLC, a woman-owned affiliate of Encon, which will continue to own the company's mold-manufacturing assets, according to Amcor Rigid Plastics spokesman Michael Hodges.
The company was founded in 1977 by Bill Gaiser, who is credited with developing the world's first PET preform. Gaiser died in August 2014. His daughter, Karin Gaiser, is the current president and CEO.
In 2007, the Society of Plastics Engineers Blow Molding Division honored Bill Gaiser with its Lifetime Achievement Award.
For Amcor, the acquired business will become part of its Ann Arbor, Mich.-based Rigid Plastics business group. Amcor is North America's No. 2 blow molder, with estimated sales of $2.27 billion, according to Plastics News' most recent ranking.
Encon makes the majority of preforms from one large-scale plant in Dayton. Amcor described the business as “well capitalized,” and said the deal will “reduce future capital requirements for Amcor's existing Rigid Plastics business.”
Hodges said Amcor is excited about Eco-Groupe's technology portfolio, which includes a modular molding system called Viper, which allows for multiple size preforms to be injected simultaneously, and Eco-Pod, a mobile manufacturing system.
“They have some cool technology that we're really excited to have,” Hodges said.
On the tooling and design fronts, Amcor and EnKon will continue to compete, and will operate independently, Hodges said.
While Amcor and Eco-Groupe both make injection molded preforms, Hodges said it is too early to say if either company will be targeted for any consolidation.
Amcor CEO and Managing Director, Ron Delia said: “This acquisition provides an excellent opportunity to acquire a well capitalized business at an attractive price. Given the manufacturing overlap, the acquisition will deliver considerable operating synergies and generate strong returns for shareholders.”
P&M Corporate Finance (PMCF) served as financial adviser to Amcor.