Toolmaker, returnable packaging firm Big 3 has new owner

Diversified manufacturer Eastern Co. is making a big move into blow mold tooling and returnable packaging with the acquisition of Big 3 Precision, a move Eastern says will immediately increase its profitability.

Eastern, based in Naugatuck, Conn., is buying Big 3 Precision for $81.7 million from TVV Capital, a move that will add at least 40 cents per share in fiscal year 2020, the company said.

The acquisition includes both Big 3 Precision Products Inc., a maker of returnable plastic and metal packaging, and Big 3 Precision Mold Services Inc., a maker of blow molding tooling.

Big 3, based in Centralia, Ill., had total sales of $72.2 million for the fiscal year ending June 30 with adjusted earnings before interest, tax, depreciation and amortization of $13.4 million, Eastern said. The company has enjoyed double-digit sales increases for five years in a row.

TVV Capital, an investment firm, is based in Nashville, Tenn.

Big 3 has locations in Centralia; Holliston, Mass.; Millville, N.J.; St. Joseph, Mo., and Dearborn and Chesterfield, Mich., according to its website.

"We've acquired a business that is right for us. It's an excellent fit," Eastern CEO August Vlak said on a conference call to discuss the purchase.

"Our goal is to create long-term value from a portfolio of leading niche industrial businesses that deliver engineered solutions to customers. We acquire companies that generate stable cash flow and we invest in bolt-on acquisitions to strengthen these individual businesses," Vlak said.

"We maximize the potential of these businesses through investments in product innovation, operational excellence, talent development and our adherence to our performance-based culture," he said. "The acquisition of Big 3 advances our strategy without unduly burdening our balance sheet."

On the returnable packaging side of the business, the business offers the design and creation of plastic dunnage as well as steel and aluminum packaging. Key markets are the heavy truck, aerospace, automotive and renewable energy fields.

On the packaging blow molding tooling side, the company provides tooling for both injection blow molding and injection stretch blow molding.

Eastern sees Big 3 as a launch pad to move even deeper into blow mold tooling.

"Big 3 is no stranger to M&A activity. It's acquired three companies in the past six years, and the nature of the packaging blow mold tooling business, in particular, offers a lot of opportunity to build some critical mass through acquisition," Vlak said.

"We also identified numerous opportunities for Big 3 to grow organically, particularly in the returnable packaging division, by leveraging many of our existing customer relationships. We've also seen a few opportunities to drive profitability through manufacturing efficiencies," he said.

"We're adding a new growth business that gives us a clear path to create compelling value and generate strong cash flow," Vlaksaid.

Todd Riley is president of Big 3, and he will stay with the company through the ownership change. Riley, in a statement, pointed to both the opportunity to boost sales and profit.

"We are excited about the opportunity to take advantage of the fragmented nature of our markets to augment Big 3 Precision through bolt-on acquisitions," he said.

Investment banking firm Stout advised TVV on the sale.