Recycler PreZero US Inc. is buying California-based film and bag maker Roplast Industries Inc., an acquisition it said will help it supply recycled-content packaging and vertically integrate into product manufacturing.
The March 1 announcement from Los Angeles-based PreZero comes after the company said in 2020 it was spending $100 million to build or upgrade recycling facilities in Jurupa Valley, Calif., and Westminster, S.C.
PreZero said the Roplast acquisition better positions it to supply recycled content bags and film and said it expects demand to grow because of legislative requirements under California's SB-270 regulatory system.
It said its recycling plants will supply resin to Roplast's factory in Oroville, Calif.
"By bringing Roplast into our PreZero family, we add the key component of manufacturing, which guarantees a viable end market for the resins we are already producing," said PreZero US CEO Hernan de la Vega.
The recycling company, which is part of the German conglomerate Schwarz Group, said its "primary business goal" is provide closed-loop solutions to businesses like Roplast's customers.
"The film and bags they buy from Roplast can be collected and processed at the material end of life by PreZero's state-of-the-art facilities," de la Vega said. "Then we can supply the same quality products back to our original customers … creating a true circular economy."
Terms of the acquisition were not disclosed.
Roplast operates a 130,000-square-foot factory and headquarters in Oroville, with a processing capacity of 30 million pounds a year. It formed in 1989.
PreZero said that within two years of the acquisition, it wants to supply up to 15 million pounds of recycled low density polyethylene for film and bags.
The company said bags covered by California's SB-270 regulatory system need to have 40 percent recycled content, which has manufacturers "looking for the limited reliable sources" of that material.
It also said it plans to gradually expand Roplast's capacity to 45 million pounds a year.
Roplast CEO Robert Bateman said PreZero's investments in recycling and its focus on a closed-loop business model make it a good fit to acquire his company.
"We have long believed that the future of our business is in reusable bags, recycling post-consumer scrap and reuse," he said. "PreZero brings the resources and network to make this prospect a reality on a large scale. This is the right company to buy Roplast."
PreZero said Bateman will not remain with the company after a transition period.
PreZero's parent company Schwarz Group is a retail and waste management conglomerate headquartered in Neckarsulm, Germany.
Schwarz, which operates the Lidl chain of grocery stores with 11,200 locations in 32 countries, also has significant assets in waste management and recycling.
PreZero International has 4,800 employees in 140 locations in Europe and North America. It formed its U.S. operations in 2018, three years after Lidl entered the U.S. market.
In the U.S., its plants in California and South Carolina recycle both film and mixed grades of rigid plastics, including polypropylene and high density polyethylene. It has a planned capacity of 160 million pounds, the company said.
PreZero executives have said they plan to open several more recycling plants in the U.S. and said in an email that it is open to buying other recyclers or manufacturers.
"PreZero is here to change the recycling industry in the U.S. and this is just the next step in that progression," de la Vega said.
The Roplast purchase is part of a series of global investments for PreZero International. Last month, the company opened a 46 million euro ($55.3 million) facility for sorting light packaging, including plastics, in Belgium.
It also announced in February that PreZero recycled resins were being used for the first time in a new line of household products made with 95 percent recycled plastic for its Lidl stores and other retail outlets owned by Schwarz Group.