A potential capital gains tax increase was the "tipping point" for Stephen Osborn's decision to sell rotational molder Trilogy Plastics Inc. to Myers Industries Inc.
In an Aug. 6 phone interview, Osborn said he "was looking for the right combination to take forward the vision that we've had for 34 years."
"I wanted a company with the same vision and same culture that made us as good as we are," he added. "Myers has that culture and Mike McGaugh has that same mindset."
Myers President and CEO Mike McGaugh added in a separate interview that Myers "had familiarity" with Trilogy.
"We knew [Trilogy] was well run and well operated and had a reputation for quality products and great culture," he said. "It really fits with Myers' values."
McGaugh added that Myers will look to make more acquisitions in rotomolding, injection molding, blow molding and thermoforming. "We want to have a national footprint of rotomolding facilities to deliver better products for our customers," he said. Potential increases in capital gains tax rates in 2022 were "the tipping point" in Osborn's decision to find a buyer for Alliance, Ohio-based Trilogy, he said. The federal government has proposed increasing the capital gains rate from 20 percent to almost 40 percent, although no final decision has been made. Any increase would affect business owners looking to sell.
"Even if [a proposed capital gains increase] hadn't happened, I might have sold, but it accelerated my thinking," Osborn said. Akron, Ohio-based Myers Industries announced the deal Aug. 2. Terms were not disclosed. Trilogy is 34 years old, but its predecessor companies date back more than 100 years. Osborn and Bruce Frank bought the company from creditors in 1987. The company has twice been featured in Plastics News' Best Places to Work, and it was also a finalist for Processor of the Year in 2015 and 2016.
Officials at Myers, a publicly traded company, said the acquisition fits into its "One Myers" long-term strategic plan, which is focused on transforming the firm into "a high-growth, customer-centric innovator of value-added engineered plastic solutions."
McGaugh said Trilogy "will unlock additional growth and expansion opportunities" for Myers.
Trilogy makes custom products for the industrial, consumer, lawn and garden, heavy truck, medical and other markets. The company employs 265 at two U.S. plants and has annual sales of about $35 million.
Originally named Old King Cole Inc. and based in Canton, Ohio, the firm got into rotomolding in the 1960s. It moved to nearby Louisville, Ohio, in the 1940s, and it built its Alliance custom molding plant in 2005.
Myers has made several acquisitions in recent years, most recently in November acquiring Elkhart Plastics Inc. of South Bend, Ind., for $62.5 million. Elkhart is one of North America's 10 largest rotational molders.
Myers officials said that the combination of Trilogy with their own Ameri-Kart and the recently acquired Elkhart businesses will create one of the largest rotational molding manufacturers in the U.S. and will provide Myers' customers with access to a more complete portfolio of diverse products.
"The combination will allow us to continue our steady growth, improve our ability to support our customers and provide more opportunities to our team members," Osborn, who is Trilogy's chairman and majority owner, said in the release.
Myers on Aug. 5 reported second-quarter sales of $187.4 million, up more than 58 percent vs. the same quarter in 2020. The firm's quarterly profit grew more than 32 percent to $11.1 million in the same comparison. Trilogy ranked 19th in Plastics News' most recently published estimate of North American rotomolders with sales of $26 million. The $35 million sales total would move them to 15th in the ranking.
Myers also does business in injection molding and blow molding under various brands, including Scepter, Akro-Mils and Buckhorn. The firm generates 75 percent of its sales from plastics processing — primarily storage containers and similar products — with the remainder coming from the tire market in repair and retreads.
During the Plastics News Executive Forum in March, McGaugh said that Myers aims to grow both organically and through acquisitions to reach annual sales of $1 billion by the end of 2023. The firm posted sales of just over $500 million in 2020.