Los Angeles-based investment firm Platinum Equity LLC is paying up to US$111 million to buy two plastics-related businesses from Singapore's Broadway Industrial Group Ltd.
The companies announced the deal Aug. 22 for Broadway's Foam Plastic Solutions and Flow Control Devices businesses, which make protective packaging, insulation and components for electronics, automotive and medical industries, and precision components for semiconductor assemblies and other industries.
It's the second plastics acquisition in 18 months in Asia for Platinum, which in April 2015 bought Hong Kong-based Ying Shing Enterprises Ltd., a maker of precision injection molded and metal stamped components.
Broadway, which is publicly traded on the main board of the Singapore Stock Exchange, said in a statement that it was selling the units in part because they “require significant capital injection for growth and development, which the group faces challenges raising in the current economic environment.”
“Not only does it unlock shareholder value, it also connects the divested businesses to a reputable and financially strong private equity firm with operational expertise and extensive experience in Asia,” said Broadway Chairman Lew Syn Pau. “I am confident that Platinum Equity will provide the much-needed resources to help the businesses grow and continue to get stronger.”
In a statement to the Singapore exchange, Broadway said it was selling the two businesses for S$150 million (US$111 million), with the deal scheduled to be completed by March.
The units reported a net profit of S$11.1 million (US$8.2 million) in the first six months of 2016, and a book value of S$110.1 million (US$81.5 million).
Platinum said it was looking for both organic growth and acquisitions for the new units.
“We have 20 years of experience providing divestiture solutions to corporate sellers and establishing thriving standalone businesses,” said Jacob Kotzubei, a partner in Platinum's LA office, in a statement. “We also have substantial financial and operational resources in Asia and a strong and growing track record of creating value in the region.”
According to Broadway's website, its foam packaging business has plastics factories in Shanghai, Suzhou, Chongqing, and Shenzhen, using expanded polystyrene, expanded polyethylene and expanded polypropylene. Customers include multinationals such as Apple, Canon, Hewlett-Packard and Fujitsu.
The deal also includes some operations in Shenzhen related to its Compart division, which provides precision components for the data storage and semiconductor industries. That division has other operations in China, Thailand and North America.