Amid the recent news of downsizing at Berry Global Group Inc., the plastics processing company actually made a recent acquisition of an injection molder in Canada.
The Evansville, Ind.-based firm purchased Pro-Western Plastics Ltd. for $88 million, according to a recent filing with the U.S. Securities and Exchange Commission.
"The acquired business will be operated within the Consumer Packaging North America Segment. To finance the purchase, the company used existing liquidity," Berry said in the SEC filing.
Berry followed up the SEC filing with a June 14 announcement of the acquisition.
Berry indicated Pro-Western has about 180 workers and brings "a highly complementary portfolio of high density polyethylene bulk and retail containers to Berry's existing container offerings."
Pro-Western has more than 750 customers, Berry said.
"The combination of Berry and Pro-Western will enhance our ability to organically grow our containers business and further serve our North American customers," said Jason Holsinger, executive vice president and general manager of containers for Berry, in a statement.
"The acquisition will enhance Berry's existing offerings to the dairy and industrial markets and expand its reach into medical containers for wipes and health care waste. Through the addition of the Alberta, Canada, facility, Berry will expand its reach into the region, which was previously not serviced," Berry added in the June announcement.
Pro-Western Plastics of St. Albert, near Edmonton, Alberta, has been in operation since 1969 and was previously privately owned, according to the company's website.
"Currently our facility has just under 150,000 square feet of operation. The plant sits on 10 acres of land, which allows for future expansion and includes a complete rail siding system," Pro-Western reports on its website. About 88,000 square feet is warehouse space.
Berry indicated in the SEC filing that the company "has recognized $35 million of goodwill on this transaction primarily as a result of expected cost synergies and expects goodwill to be deductible for tax purposes." Goodwill, in accounting, represents the purchase price of a company beyond the value of its assets.
News of the Pro-Western Plastics acquisition, which closed March 31, comes at a time when Berry is taking a hard look at its manufacturing base with an eye toward cutting costs.
Berry, with some $14.5 billion in annual sales last fiscal year, uses a variety of processes to create thousands of plastics products, including injection molding. Berry is a global company and is estimated to be North America's largest injection molder, according to new rankings just published by Plastics News.
The company, in its most recent earnings report, indicated plans to shutter 15 locations and held out the potential to close even more. These moves come at a transitional time for Berry, which has used a series of more than 40 transactions, including some huge deals in recent years, to explode in growth.
Berry also is looking at the possibility of shifting production to lower-cost sites as the company examines its manufacturing portfolio. That includes the potential to increase production in locations such as Eastern Europe to supply Western Europe, India to supply elsewhere in Asia and Mexico to produce products for North America.
Berry has come to de-emphasize acquisitional growth and instead is funneling more money to shareholders through the creation of the company's first dividend and a push to buy back shares of stock. The company has long believed shares are undervalued and has spent hundreds of millions of dollars on repurchases. The theory behind stock buybacks is that they are designed to lower the number of overall outstanding shares, thus making them move valuable as they represent the overall value of a firm.
Pro-Western Plastics' location "allows for future expansion and includes a complete rail siding system," the company said on its website.
Berry is the top ranked injection molder in North America with sales of $2.1 billion in 2022, according to the new PN ranking. The company has a total of 41 injection molding plants in North America, including 1,443 presses and 9,276 employees, the company said.