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Consolidation continues

July 19, 2005

There’s a touch of unfinished business about this column, in fact as Yogi Berra quipped, “It’s déjà vu all over again.” Readers may remember that the last column led with some observations about the troubled label stock laminating business. It has certainly been an eventful year, with its crop of business failures, takeovers and mergers. Following the Avery Dennison and Jackstädt merger, news comes that Raflatac and MACtac plan to get together. It wasn’t entirely unexpected, given that its two closest rivals were out to grab large chunks of its global business.
In any event, UPM-Kymmene Corporation, the Finnish paper products group which owns Raflatac, plans to hand over $420 million to the Bemis Company Inc. for its MACtac label stock business. UPM has separately agreed to sell its non-core plastic films manufacturer, Walki Films, to Bemis for $70 million. Both transactions are expected to close by year end, pending approval by the competition authorities.
Raflatac has about 2,000 employees working in eleven label stock factories on five continents. Its network of terminals and sales offices includes two separate US operations. By absorbing MACtac it plans to strengthen its global paper and filmic label stock business, especially in the US where it already has a strong presence. It will also seek to gain logistics and purchasing benefits. Raflatac is also keen to plug into MACtac’s expertise in specialized materials and technical tapes. For example, MACtac has useful knowledge of RFID technology, which complements the Rafsec smart label development based on Philips Semiconductors’ I-Code IC chip.
Headquartered in Stow, OH, MACtac’s turnover last year was approximately $500 million, derived from five production facilities in the US, one in Belgium and a joint venture in Mexico. Bemis was founded in 1858 and last year generated sales worth $2.3 billion, mainly from flexible packaging for food and consumer products, so the Walki Films business is a good fit.
For its part, the UPM-Kymmene Converting Industry division will also be looking for its own production efficiencies, not just on Raflatac’s coating/laminating lines, but also at its own base-paper facilities. Rationalizing product lines and introducing new specializations could also benefit its Loparex siliconized release liner business. Walki Wisa, which produces wrappings and composite materials, is the third member of the division.
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