Flexible packaging powerhouse ProAmpac is being acquired by a Chicago-based investment firm that has a keen interest in the plastic packaging business.
Pritzker Group, controlled by billionaire brothers Tony and J.B. Pritzker, views the move as both an entry into the flexibles business and a platform to make even more deals.
With sales near $1 billion annually, ProAmpac already is a substantial business on its own with more than 2,400 employees and 18 manufacturing sites in North America, Europe and Asia.
“We've had a very strong focus on the flexible packaging market for a while. We like all the trends in that market,” said Michael Nelson, an investment partner with Pritzker Group. “It's growing at faster rates than some of the other parts of the packaging market.
“We started with that thesis and we've been looking for a great platform in that space,” he said. “We anticipate there will be further consolidation in that space and we want to be one of the consolidators.”
Pritzker Group, through its Private Capital unit, is joining with unnamed co-investors and ProAmpac management to take control of the firm from Wellspring Capital Management LLC, a New York-based private equity firm. Management will remain a “significant shareholder” and continue to run the business, Pritzker Group said.
“We think ProAmpac is one of the clear leaders in the flexible packaging market for North America. They have a No. 1 or No. 2 position in all their key end markets. They have a very diverse customer base. The largest customer is only 5 percent of revenue. And they have a very diverse product line,” Nelson said.
Pritzker Group already owns Technimark LLC of Asheboro, N.C., an injection molder that primarily works in consumer and medical products rigid packaging.
Pritzker Group actually looked at Ampac LLC last year before Wellspring acquired the firm and merged it with its Prolamina Corp. to create ProAmpac, Nelson said.
Since then, Cincinnati-based ProAmpac acquired Coating Excellence International, a flexible packaging company based in Wrightstown, Wis. ProAmpac faces the market with the Prolamina, Ampac and Tulsack brands. Markets served include food, pet food, medical, security, industrial and specialty retail.
“Obviously, we were not the winner in that process because Prolamina bought it. But that really started us thinking about us establishing a direct dialog with ProAmpac and Greg Tucker, the CEO, and Wellspring, its owner,” Nelson said.
The deal is expected to close in November, and that quick timeframe was attractive to Wellspring, he said.
“Combining our permanent, proprietary capital base with this management team will enable ProAmpac to have tremendous opportunities for growth, both through organic initiatives and accretive acquisitions,” said J.B. Pritzker in a statement.
“We view the flexible packaging market as ripe for consolidation,” Nelson said.
ProAmpac was ranked 12th on Plastics News' most recent listing of film and sheet producers in North America, although the company does have operations in Europe and Asia as well. Global sales were listed as $925 million, with $690 million coming from North America, according to the ranking.