Novolex gets new owner in private equity deal

Novolex Holdings Inc., a diverse packaging manufacturer well known for making those ubiquitous plastic shopping bags, is getting a new majority owner in a deal reportedly valued at $6 billion.

The purchase continues a long transactional history between private equity firms for the company known as Hilex Poly before a 2014 name change.

This time around, Apollo Global Management Inc. is taking a majority share of Novolex while Carlyle Group retains a minority portion, the firms said Feb. 14.

Novolex makes a variety of plastic bags through its Hilex Poly division that touch the everyday lives of consumers, including so-called T-shirt retail bags, produce bags and specialty products such as ice bags.

Other business units include Heritage Bag, a maker of institutional garbage can liners and medical waste bags. Novolex also operates Waddington Group, a thermoformed packaging maker that has operations in both North America and Europe. The company's portfolio has expanded in recent years to include paper fiber-based packaging as well.

Novolex is No. 9 in the new Plastics News ranking of North American thermoformers with an estimated $500 million in annual sales for the region. It ranks as No. 6 among film makers in North America, with $1.5 billion in annual sales.

Carlyle Group purchased Novolex from majority owner Wind Point Partners and minority owner TPG Growth in late 2016. At that the time, Novolex CEO Stan Bikulege called the move "the next big step for Novolex." Wind Point took its majority stake from TPG in a 2012 deal.

Here's how he described, in a statement, the latest move: "This transaction is a milestone in the Novolex growth story and for the 10,000 families who contribute to our company every day. Apollo offers tremendous resources and expertise and brings significant experience in the packaging industry to the table that will enable us to continue to thrive on the next leg our journey."

Tim Burns is a senior adviser at Perella Weinberg Partners, where he keeps a close eye on the packaging industry for the financial services firm. And, for him, the deal makes sense for a few reasons.

"They've got a lot of experience in the packaging field," Burns said about one of the world's largest investment firms. "First of all, it's a big deal. Apollo needs big deals."

Apollo has a history of making investments in the packaging segment, so an investment in Novolex comes with knowledge.

"They really do packaging well," Burns said. "It's an attractive market. I think it's a smart move for them."

While the roots of Novolex and Hilex Poly are in plastics, the company has made significant investments in paper packaging in recent years.

Paper packaging, he said, is a strong market that's only growing stronger over time.

Novolex made six acquisitions under Carlyle and doubled employment during its ownership, the CEO said. The company now has 57 manufacturing locations, including two plastic recycling sites, in North America and Europe.

"The company has a strong management team and is poised to capitalize on growth across food delivery and e-commerce as well as increasing demand for environmentally responsible and compostable products," Apollo partner Rob Seminara said in a statement.

Apollo and Carlyle have a definitive agreement for the transaction, which is expected to close during this year's second quarter, subject to regulatory approvals. Terms were not disclosed by Apollo or Carlyle, but Bloomberg is reporting the transaction is worth $6 billion.