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May 07, 2021 08:44 AM

Good Natured Products buys Illinois-based sheet extruder Ex-Tech Plastics

Jeannie Reall
Correspondent
Plastics News Correspondent
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    Good Natured Products Inc.
    Good Natured Products Inc. has been acquiring companies to support growth of bio-based packaging.

    A company preaching the gospel of polylactic acid-based bioplastics is working to convert processors of conventional plastics, one company at a time — or three in 12 months.

    Good Natured Products Inc. of Vancouver is acquiring sheet extruder Ex-Tech Plastics Inc. of Richmond, Ill. Good Natured has agreed to pay US$14.1 million for all of Ex-Tech's operating assets along with real estate owned by a related company, ETP Inc.

    Those assets include Ex-Tech's 75,000-square-foot facility on 9 1/2 acres of land. Ex-Tech operates seven extrusion lines, serving customers in the food, retail and medical packaging markets, among others. Its customers primarily are in the U.S. Midwest and Southeast. It recorded 2020 sales of US$25.8 million (C$33 million), generated profit of about US$1.5 million and delivered EBITDA of about US$2.6 million.

    The acquisition is expected to be accretive immediately to Good Natured shareholders on an adjusted EBITDA basis.

    Good Natured said it will gain many benefits through the acquisition. The land will provide enough room to add a 40,000-square-foot facility and expansion of the existing plant to support more thermoforming or extrusion lines, as well as warehouse space. The plant currently has annual production capacity of 42 million pounds; adding one high-speed extrusion line would increase that figure to 60 million, Good Natured noted. The company did not outline definite expansion plans, however.

    The company also noted it will be looking to divest business that isn't compatible with a changeover to plant-based materials.

    The two companies have a long-standing relationship. Good Natured, a public company previously known as Solegear Bioplastic Technologies Inc., bought Ex-Tech's bioplastics division in 2016. Under that agreement, Ex-Tech became Solegear's exclusive provider of plastics extrusion services in North America, and Solegear became Ex-Tech's exclusive supplier of bio-based materials and additives.

    Solegear changed its name in 2017 as it transitioned from a biopolymers engineering firm to a producer of consumer products and packaging. The company's products now include plant-based home organization products, bioplastic industrial supplies, medical packaging and compostable food containers.

    A year ago, Good Natured bought Brampton, Ontario-based Shepherd Thermoforming & Packaging Inc. At that time, Good Natured CEO Paul Antoniadis said: "If the brand or company sells petroleum-based products, we intend to convert them to a range of plant-based materials."

    That effort continued. In December, Good Natured acquired IPF Holdings Inc., which does business as Integrated Packaging Films, for C$16.7 million (US$13.7 million). IPF extrudes sheet for customers in the electronics, retail, industrial, food and medical packaging markets.

    The Ex-Tech and IPF purchases are expected to almost double Good Natured's sales to about C$66.8 million (US$54.8 million).

    However, Good Natured reported a loss of C$7.19 million in the year that ended Dec. 31, compared with a loss of C$3.47 million the year before.

    The company said the Ex-Tech acquisition also will increase Good Natured's capacity to produce rollstock of compostable polylactic acid and plant-based PET "to support organic growth and conversion of existing and future petroleum-based acquisition targets."

    Good Natured said it expects to close the deal by June 30 and the current Ex-Tech management team will join Good Natured.

    Family-owned Ex-Tech's officials hold about 5 million shares of Good Natured. Emily Pichon, Ex-Tech chair and majority owner, said the family intends to retain those shares.

    "We have witnessed firsthand, over the past several years, the tremendous growth we've achieved with Good Natured and also benefited as material owners," Pichon said in a May 5 news release.

    "We believe now is the perfect time for the two companies to fully integrate. Given the significant growing demand for environmentally responsible materials and the greater scale and influence we can achieve together, combining forces creates tremendous value in our industry, as well as for all of us as owners."

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