Following the July purchase of US-based Nelipak, a major manufacturer of custom plastic packaging for the health care sector, investment firm Kohlberg & Co has made good on a promise to further extend the business with other ‘sizeable, global acquisitions’.
Kohlberg, which is based in New York state, has followed up the purchase of Nelipak by purchasing Bemis Healthcare Packaging Europe for $394m (£326m, as of 9 August). The company was then immediately merged with Nelipak.
The combined companies have operations 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.
Fallout of Amcor-Bemis deal
Kohlberg picked up the Bemis Healthcare business on the back of this year's packaging megamerger, which saw Amcor take over Bemis Co. for $6.8bn (£5.63bn). The European Commission asked the companies to divest the European health care business due to competition concerns.
Industry veteran Peter Schmitt, managing director of Delaware-based Montesino Associates, called the Nelipak deal an example of a major "remapping" of the sterile medical packaging market, driven by Amcor's previous deal.
"Not too long ago, there were two major public companies in both food and medical packaging: Amcor and Bemis," said Schmitt. "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.
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, Tekni-Plex, based in Pennsylvania and owned by Genstar Capital, bought three manufacturing plants from Amcor's Flexible Packaging business unit for $215m to broaden its portfolio of sterilizable medical device packaging. That deal included three US 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.
Nelipak by the numbers
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 Rhode Island, the company had plants in locations such as Pennsylvania, Puerto Rico and Costa Rica. Other plants are in Galway, Ireland and Venray, The Netherlands.
With an estimated $90m 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, represent the entire medical packaging business of Wisconsin-based Bemis. They have combined annual sales of around $170m.
Kohlberg highlights synergies
Kohlberg executives have 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 in July this year.
Nelipak's products include thermoformed trays and blisters used to protect Class II and Class III medical devices and pharmaceuticals. Other products include trays for surgical procedures, such as orthopedic and cardiac implants, plus auto-injectors and pre-filled syringes and vaccines.