Fallout of Amcor-Bemis deal
Kohlberg picked up the Bemis Healthcare business as a result of the year's packaging megamerger: Amcor Ltd.'s $6.8bn (€6bn) purchase of Bemis Co. Inc. The European Commission asked the companies to divest the European health care business because of competition concerns.
Industry veteran Peter Schmitt called the Nelipak deal an example of a major "remapping" of the sterile medical packaging market, driven by Amcor's deal.
"Not too long ago, there were two major public companies in both food and medical packaging: Amcor and Bemis," said Schmitt, managing director of Montesino Associates LLC in Wilmington, Delaware. "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 plc.
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, Wayne, Pennsylvania-based Tekni-Plex Inc., which is owned by Genstar Capital, bought three manufacturing plants from Amcor's Flexible Packaging business unit for $215 million 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 Cranston, Rhode Island, the company had plants in Whitehall, Pennsylvania; Phoenix; Humacao, Puerto Rico; San José, Costa Rica; Galway, Ireland; and Venray, the Netherlands.
With an estimated $90 million 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, represented the entire medical packaging business of Neenah, Wis.-based Bemis, and have a combined annual sales of around $170m (€152m).