View Original Article by Jim Johnson
Coveris Holdings Corp., which started as amalgamation of five plastic packaging companies that had common ownership, is not shy about expressing its plans to continue growing.
While the Chicago-based company says it won’t do a deal just to get bigger, it also talks about opportunities to expand both internally and externally. But only where it makes sense.
Chris Wrobel is vice president of global strategy and commercial excellence at Coveris, and he subscribes to new math where 1+1 = 3. That’s the kind of equation that Coveris likes, where adding on a part helps create more value from the combined resources than keeping them separate.
And that’s one approach that helps drive the company’s vision for growth around the world these days.
“We’re not just mushing together the legacy companies and pretending to be a larger one. We really have a greater strategy for being a comprehensive packaging company,” he said.
“We’re being pretty prescriptive and restrained in how we go after bolt-ons because there’s a gentle balance between what can we build organically and we’re highly capable of doing, and then there are places where it’s just going to be too time consuming and too costly to enter [without a transaction],” he said.
Coveris, in June, acquired Olefinas, an agricultural plastics company with operations in both Guatemala and Mexico.
Olefinas makes a variety of products for the banana industry including tree bags, labels, twine and aging ribbons as well as mulch and fumigation films, insect traps, modified atmospheric packaging and shrink films, Coveris said. Locations in Guatemala City and San Luis Potosí, Mexico, employ more than 600.
And, in May, the company acquired Elldex Packaging Solutions of Auckland, New Zealand.
Elldex makes high and low density polyethylene flexible packaging for a variety of applications, including meat, dairy, seafood, horticulture and agriculture, mostly in Australia and New Zealand.
Those two deals followed three others in 2014.
“There are three or four global platforms or market verticals that we are dedicating ourselves to,” Wrobel said, including food, pet care products and agricultural.
Because of Coveris’ history of combining a handful of companies at its creation in 2013, the company tends to do well in identifying potential new acquisitions, he said.
“It’s less about being big than it is about making sure we are true to our strategic intent,” Wrobel said.
“We’re not necessarily chasing everything. It’s a bit easier because when you know why you want to get into a stage or a technology, it’s much smoother because you’ve evaluated your synergies and you’ve calculated the ‘why’s’ very well,” he said. “It’s not just to brag about closing a deal. It needs to be the right fit at the right time.
“We’re always going to look at the right opportunities — build vs. buy — and expand whether it be geographically or through market platforms,” he said.
“I don’t think you are going to see our deal flow stop. And I don’t think you are going to see us do anything crazy. We’re rather mature in how we look at the world,” he said.
In other words, anything the company does buy will make business sense. “We’re not going to disrupt that by just doing something outlandish,” Wrobel said.
Coveris, which calls itself the sixth largest global plastic packaging company, is owned by Sun Capital Partners Inc., a Boca Raton, Fla.-based private equity firm. Coveris originally formed in 2013 through the combination of Exopack, Britton Group, Kobus, PACCOR and Paragon Print & Packaging. Sun Capital later added KubeTech Custom Molding, another company in its portfolio, to Coveris in 2014. The company ranks 18th in this year’s North American film and sheet manufacturers rankings compiled by Plastics News, with estimated sales of $510 million.
Outside of Coveris, Sun Capital also owns Albea, a Gennevilliers, France-based company that makes a wide variety of packaging for the fragrance, skincare, personal care and oral care markets.
Sun Capital’s varied portfolio of companies has holdings in restaurants, consumer products, industrial, packaging and retail operations, including Hickory Farms and the Limited clothing store chain.
Even only after about two years, Coveris sees itself as a more mature company than when the initial five firms first came together, Wrobel said.
“We’re just a much more wise company, and I think that allows us to be more unified in how we approach markets. It’s allowing us to be more thoughtful and innovative with our clients as well,” he said.