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July 20, 2018 02:00 AM

Intertape buys Polyair Inter Pack for e-commerce growth

Michael Lauzon
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    Polyair Interpack Inc.
    Polyair's portable Airspace system allows customers add air to protective packaging as needed.

    Intertape Polymer Group Inc. is betting on high growth in e-commerce.

    Intertape has agreed to buy all the equity in Polyair Inter Pack Inc., a major producer of protective packaging such as bubble cushioning. The agreed-on purchase price is about $146 million, about seven times adjusted earnings before interest, taxes, depreciation and amortization for the Polyair business.

    Polyair runs seven manufacturing facilities and a distribution center in North America. Intertape estimates the deal will add about $133 million to its annual sales after the deal is closed.

    "There is very little crossover between the two companies," said Intertape spokesman Ross Marshall in an interview. While the two firms have a few products in common, they sometimes call on ​ the same customers and can now offer each other's products. As well, Intertape would gain some new clients through Polyair.

    Intertape, with headquarters in Montreal and Sarasota, Fla., is a packaging conglomerate with operations for film extrusion, tape production, woven coated fabrics and related products for industrial and retail use. It manages 13 production facilities in North America, two in Asia and one in Europe. It employs about 2,850.

    Polyair, with headquarters in Toronto and Chicago, employs about 600. Its protective packaging goods dwarf Intertape's air pillow offerings. Polyair's product lines include bubble film, foam, mailers and air pillows. It is owned by Glencoe Capital LLC, a Chicago-based private equity company.

    Polyair and Intertape both focus on e-commerce as a growth area, the companies noted in a July 18 news release.

    "We consider protective packaging an important driver for our vision and we expect this acquisition to create value for our shareholders," said Intertape President and CEO Greg Yull in a news release.

    "We believe [Intertape] shares our vision of customer service, product breadth and quality as well as operational excellence in low-cost manufacturing," said Polyair CEO Gary Tessitore in a news release.

    Intertape expects to finalize the agreement in the third quarter.

    Intertape predicts the purchased business will generate about $14 million in adjusted EBITDA for the year ending Dec. 31, 2018. It also predicts Polyair will generate about $20 million to $22 million in adjusted EBITDA by 2021, based on synergies and organic growth driven mainly by e-commerce trends. No cash or debt will be acquired in the transaction. Intertape will fund the purchase from its $600 million credit facility.

    Intertape reported sales of $237.2 million for the first quarter that ended March 31, up 12.7 percent from the year-earlier period. Most of the increase relates to Intertape's purchase of Canadian Technical Tape Ltd. in July 2017. Operating profit for the first quarter was $18 million, about 10.6 percent lower than a year ago.

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