Kohlberg closes on Bemis Healthcare Packaging Europe acquisition, merges with Nelipak

As promised, Nelipak Corp. Inc. is growing globally under its new ownership.

In July, investment firm Kohlberg & Co. LLC acquired the major manufacturer of custom plastic packaging for the health care sector. At the time, Mount Kisco, N.Y-based Kohlberg announced it had plans to leverage the business with "sizeable, global acquisitions."

Kohlberg made good on the pledge Aug. 8, when it completed a previously announced deal to buy Bemis Healthcare Packaging Europe for $394 million — then immediately merged the unit with Nelipak.

The combined companies have footprints in both North America and Europe. Products include flexible and thermoformed packaging.

"This will significantly enhance Nelipak's capabilities with the addition of flexible packaging alternatives for our global customers," Mike Kelly, president and CEO of Nelipak, said in a news release.

Kohlberg picked up the Bemis Healthcare business as a result of the year's packaging megamerger: Amcor Ltd.'s $6.8 billion purchase of Bemis Co. Inc. The European Commission asked the companies to divest the European health care business because of competition concerns.

Industry veteran Peter Schmitt called the Nelipak deal an example of a major "remapping" of the sterile medical packaging market, driven by Amcor's deal.

"Not too long ago, there were two major public companies in both food and medical packaging: Amcor and Bemis," said Schmitt, managing director of Montesino Associates LLC in Wilmington, Del. "Indeed, they split the assets of Alcan when Alcan's packaging division was divested. Now they are merging."

Bemis and Amcor grew significantly when they split the former Alcan Packaging business in 2010, which had been owned by metals and mining firm Rio Tinto plc.

But when Bemis and Amcor agreed to merge, competition authorities in the United States and Europe asked the two to divest big chunks of their medical packaging business — and private equity firms pounced on the opportunity.

First, Wayne, Pa.-based Tekni-Plex Inc., which is owned by Genstar Capital, bought three manufacturing plants from Amcor's Flexible Packaging business unit for $215 million to broaden its portfolio of sterilizable medical device packaging. That deal included three U.S. plants.

Now Kohlberg-backed Nelipak has done the same with three Bemis plants in Europe.

Schmitt said the private equity firms are building a portfolio of packaging companies focused only on medical devices or health care, not food.

"The question is, will Amcor be able to focus on both food and medical, and use its size and brand strength to grow its position? Or will this new map of strong and growing sterile medical packaging companies led by private equity challenge Amcor in the medical arena?

"Additional consolidation appears to be likely. Add to that the uncertainty of both trade wars and a possible recession and we will see some interesting moves in the future," Schmitt said.

Prior to the merger, Nelipak, which has been in business for 60 years, employed more than 800 at seven production sites. In addition to its headquarters in Cranston, R.I., the company had plants in Whitehall, Pa.; Phoenix; Humacao, Puerto Rico; San José, Costa Rica; Galway, Ireland; and Venray, the Netherlands.

With an estimated $90 million in sales, Nelipak Healthcare Packaging ranked No. 25 among North American thermoformers, according to the latest Plastics News ranking.

The Bemis Healthcare deal adds three more plants and 600 employees. The three plants, in Londonderry, Northern Ireland; Clara, Ireland; and Brigg, England, represented the entire medical packaging business of Neenah, Wis.-based Bemis, and have a combined annual sales of around $170 million.

Kohlberg officials highlighted how combining the two businesses gives Nelipak global scale and a wider range of plastic packaging products.

"Our recent acquisition of Nelipak represented a platform for growth and consolidation," Seth Hollander, a partner at Kohlberg, said in the release. "The Bemis acquisition provides a unique opportunity to create global scale and diversification across complementary product offerings."

Roger Prevot, operating partner at Kohlberg, added: "This combination provides attractive opportunities for revenue growth from cross-selling and geographic expansion. Mike and his team will be better equipped to serve the company's customers as a comprehensive partner for their packaging needs."

Kohlberg bought Nelipak from Milwaukee-based Mason Wells on July 2.

Nelipak's products include thermoformed trays and blisters used to product Class II and Class III medical devices and pharmaceuticals as well as trays for surgical procedures, such as orthopedic and cardiac implants, and handling drugs, such as auto-injectors, pre-filled syringes and vaccines.