Private equity firm to buy Bway Parent for $1.24 billionPrivate equity firm to buy Bway Parent for $1.24 billion
Packaging manufacturer Bway Parent Co. will be acquired by an affiliate of Platinum Equity in a deal worth about $1.24 billion.Bway Parent is a North American supplier of general line rigid containers operating through its primary subsidiary, Bway Corp.
October 3, 2012
Under the terms of the agreement, Platinum Equity will acquire Bway Parent from funds managed by Madison Dearborn Partners, LLC via a merger. Senior executives of the company and a number of other employees will invest in the transaction alongside Platinum.
Bway expects the transaction to close in the fourth quarter of 2012.
"We are very excited about this transaction with Platinum Equity. Platinum brings to Bway a strong operational and strategic focus and a tremendous track record of value creation that we are convinced will help us achieve new levels of success," said Ken Roessler, Bway's president and CEO. "We look forward to taking the next step in the evolution of our company."
Bway has annual sales exceeding $1 billion, according to the company's website. The Atlanta-based based company has operations in the United States, Puerto Rico and Canada, and sells primarily to customers located in these geographic markets. The company reports its operations in two business segments: plastic packaging and metal packaging.
In an August 13 report on fiscal third-quarter earnings, sales for the company's plastic packaging segment were $128.7 million for the third-quarter of fiscal 2012, compared to $134.2 million for the year-earlier period. The decrease resulted in part from lower volume which declined by 5.1% compared to the third-quarter last year, partially offset by higher selling prices driven by higher raw material costs, the company stated.
Plastic packaging segment earnings (excluding depreciation and amortization) for the quarter were $7.2 million, compared to $7 million for the third-quarter of fiscal 2011. The increase resulted from favorable timing and effect of raw material price changes and the associated selling price pass-through, which was largely offset by the effect of lower volume, according to the company.
In March 2012, the company sold equipment used to manufacture blowmolded plastic bottles to Ring Container Technologies. The business included a variety of plastic bottles generally ranging in size from 1 gallon to 10 liters primarily serving the agricultural and other chemicals markets, and various other end-use markets. Bway had sales from this business of about $21 million in sales in 2011.
Roessler said while blowmolded bottles represent a good business, the company did not believe that substantial growth in this segment was "practical" for Bway.
"This sale allows us to focus on the company's blowmolded tighthead container business, a core market where we hold the leading market position," he said. "Our focus will include blowmolded tighthead container investments in product development, new container and manufacturing equipment technologies, and capacity."
In the 2010, Bway acquired injection molded plastic container maker Plastican Inc. in a stock purchase transaction. Plastican operated four manufacturing plants and generated net sales of $90 million in 2009.
Roessler said Plastican fits its "core market add-on acquisition strategy," expanding Bway's market share in overlapping items in addition to expanding its product offerings with new items.
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