Updated May 3: In a major plastics packaging deal, Sealed Air Corp. is acquiring Automated Packaging Systems Inc. for $510 million.
Charlotte, N.C.-based Sealed Air announced the deal in a May 1 news release. APS, which is based in Streetsboro, Ohio, is a supplier of automated bagging systems and pre-opened bags on a roll. APS has annual sales of $290 million and employs more than 1,200 at seven sites in the United States and the United Kingdom.
APS CEO Cliff Brehm said in a May 2 phone interview that APS “has had tremendous growth over the years, especially in the last 10 years.”
“We're now at an inflection point as a business where we need support in meeting the next chapter of our growth,” he added. “Sealed Air is a very well-respected leader in the industry. We have similar cultures and our growth strategies align very well.”
APS sells its bagging machines under the Autobag trade name. The business was founded by brothers Bernie and Hershey Lerner in Queens, N.Y., in 1962 before moving to the Cleveland area two years later.
APS is majority owned by employees through an employee stock ownership plan that began in 1997. The Lerners also retained a stake in the firm.
The change in ownership will be “a little bittersweet” for APS and its employees, Brehm said. “A lot of us grew up in this business,” he added. “There are a lot of emotional people here today.”
APS officials said that the firm generates about 75 percent of its sales from pre-made bags and related products, with about 16 percent from machinery sales and the remainder from technical service.
Brehm, who started at APS as a machine assembler in 1976 and became president and chief operating officer in 2010, said he intends to remain with the firm.
One plastics packaging analyst told Plastics News that the $510 million sale price represents a multiple of around 10 times annual earnings before interest, taxes, deprecision and amortization (EBITDA). He also said that packaging firm Pregis LLC had been a possible buyer of APS before the Sealed Air bid was accepted. Brehm declined to comment on the earnings multiple or on other potential buyers.
APS and Sealed Air “had been talking for more than a year,” the analyst said. “Sealed Air was the preferred incumbent because of their reputation, technology and reputation as a market leader.”
He added that $510 million was “a fair price,” adding that APS owners “have a bigger-picture philosophy that includes taking care of their employees and estate planning.”
Bernie and Hershey Lerner assembled their first bag machines in a 200-square-foot garage that adjoined Hershey Lerner's house. Those early machines used sawed-off broom handles as spindles that pierced the sides of a cardboard box. A roll of 1,000 detachable PE bags was mounted on the spindle, with a small electric blower mounted on the box to separate the bags.
Art Gould was another major contributor to APS, first as a salesman who undertook 10-week sales trips and later as an executive. Gould died in 2015.
APS moved from Queens to northeast Ohio in 1964 when a customer offered them space in a new production plant. For that first Ohio winter, the Lerners and Gould shared a mobile home near the plant.
Today, Hershey Lerner is 99 years old and his brother Bernie is 92. Brehm said that Bernie still comes in to the APS office in Streetsboro every day.
“They're engineers, so they love to come in and tinker,” Brehm said.
In a 2012 company history, Bernie Lerner commented on the company that he and his brother built.
“I feel [APS] can survive under many different circumstances,” he said. “Our strength always has been our people and our culture. I believe everyone wants the culture to continue, no matter who's in charge.”
Sealed Air is a major publicly owned packaging firm whose brands include Bubble Wrap and Cryovac. The firm employs 15,500 worldwide and posted sales of $4.7 billion in 2018. The company ranked No. 5 on Plastics News' ranking of North American film and sheet manufacturers.
