M&A opportunities remain alive in challenging market

Two recent mergers illustrate that some processors see opportunity in the current challenging conditions. For instance, the merger of heavy-gauge thermoformers and suppliers of truck bed liners and tonneau covers, Penda Corp. (Portage, WI) and Durakon Industries (Lapeer, MI), brings together the respective No. 1 and 2 suppliers in the market to create the largest supplier of truck bed liners.

Penda, owned by private equity firm Resilience Capital Partners (Cleveland, OH) since August 2007, and Durakon, owned by private equity firm Littlejohn & Co. LLC (Greenwich, CT) since 1999, join in a new company that retains the Penda name and is headquartered in Portage, WI, with Resilience acting as the majority owner by a slim margin, according to Cathy Cromey, VP corporate services for Penda.

Cromey described the merger as complementary, especially from a technology standpoint, with Durakon bringing shuttle presses and twin-sheet thermoforming to the combined company, and Penda adding its own co-extrusion sheet lines, among other technologies. Combined revenue will be about $100 million. She said there are no intentions now of closing any facilities; in addition to the sites in Michigan and Wisconsin, the combined company also has manufacturing in Clinton, TN and Lerma, Mexico.
In a second major North American merger, injection molder Pelican Products Inc. (Los Angeles, CA) acquired rotational molder Hardigg Industries (South Deerfield, MA). Both processors serve the protective case industry.

Pelican CEO Lyndon Faulkner told MPW that by nature of the company’s respective processes – low-volume large-part rotational molding and high-volume smaller-part injection molding – there was very little overlap between their clients. Private equity group Behrman Capital, which acquired Pelican in 2004, provided approximately $200 million in financing for the deal. The new business has more than 1500 employees, 22 offices in 12 countries, and six manufacturing sites spread between Europe and North America. Faulkner says the goal is to grow both companies to combined annual revenue of $500 million.—[email protected]