Klöckner Pentaplast to acquire Linpac Group

In a deal that combines two global plastics packaging companies, Klöckner Pentaplast Group has signed an agreement to buy Linpac Group Ltd., the companies announced April 7.

The companies are already owned by the same investment firm, and the deal may foreshadow an initial public offering for the combined company later this year.

Terms of the deal were not disclosed. The transaction is subject to regulatory approvals and is scheduled to close this summer.

KP and Linpac are owned by Strategic Value Partners LLC, which does business as SVPGlobal. The Greenwich, Conn., firm specializes in distressed debt and value investments.

Linpac is based in Birmingham, England. It has been owned by SVPGlobal since 2015. Reuters had reported in November that SVPGlobal was trying to sell Linpac, and that the price tag could be $555 million.

SVPGlobal also tried to sell Montbaur, Germany-based Klöckner Pentaplast in 2014, but took the firm off the market when bids came in well below the asking price of $1.9 billion. SVPGlobal bought KP in 2012 for debt and equity of $1.3 billion.

KP has been planning an initial public offering. Reuters reported April 7 that the IPO may now be delayed until the Linpac deal is finalized.

Combining KP and Linpac could make an IPO more attractive, both because of the size of the company and the potential for synergies.

SVPGlobal could also consider spinning off pieces of the business that would be more attractive to certain buyers or IPO investors, for example the health care or food packaging businesses.

According to KP, the acquisition of Linpac will create a global leader in the rigid and flexible film market and the combined annual sales will exceed $2 billion.

“This is a highly complementary acquisition that will help KP expand our technological capabilities and presence into the food industry and the rigid and flexible film market,” said KP CEO Wayne Hewett.

The transaction also will further develop KP's offerings in end markets such as pharmaceuticals, food and beverage, and consumer and industrial products.

“We are excited to join forces with KP and believe this transaction will significantly accelerate Linpac's geographic expansion,” said Daniel Dayan, CEO of Linpac.

The strategic rationale behind the move is to create a one-stop-shop with the combination of the two film production capabilities. KP said the acquisition will expand its technological capabilities.

Additionally, KP expects to create an “R&D powerhouse” through the acquisition and to provide “tailor-made” products for customers.

Together, KP and Linpac will have 32 locations across 16 countries with about 6,300 employees. In North America, KP ranks No. 13 in the Plastics News survey of film and sheet manufacturers with estimated sales of $635 million.

The consolidated group will be led by Hewett. Dayan will lead the food packaging business.

Plastics News Europe contributed to this report.