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Austrian deal

July 19, 2005

After a quiet spell on the merger front, CCL Industries Inc. has broken ranks by widening its considerable interest in consumer-based packaging and labeling. The Toronto-based organization has bought a 51 percent controlling interest in Pachem AG, a privately-owned Austrian producer of pressure sensitive, shrink sleeve and in-mold labels. CCL’s investment cost around Cdn$20 million, including assumed debts, and is expected to be finalized during the first quarter of this year.
It will be remembered that CCL Industries gained its first major hold in Europe by acquiring Jarvis Porter’s UK, French and Dutch operations early in 2002. These focus on servicing major global customers in the personal care, pharmaceutical and chemical label markets.
The joint venture, named CCL-Pachem, is headquartered at the existing facility in Honehems and focuses on supplying products for premium European brands in the food, beverage and battery categories. There is also a gravure plant in Avelin, France, and a label plant in Rhyl, North Wales. Last year the three plants produced sales of over Cdn$45 million. CCL is planning 50 percent expansion over the next three years.
Commenting on the partnership deal, Guenther Birkner, CEO of Pachem and CEO of the new venture, says: “The large global brand owners in the food and beverage markets increasingly look to package differentiation as a means to develop new products and gain market share. Our cooperation with a strategic player in the product decoration business like CCL gives us the financial strength and global reach to be a leader in this rapidly developing market.”
“We have long admired the management of Pachem and their rapid growth in the plastic container decoration business,” says Geoffrey Martin, president of CCL’s Label Division. “Their expertise in the area of in-mold, off-mold and shrink sleeve systems, coupled with our pressure sensitive and heat transfer label expertise in glass bottle decoration, will position us strongly in this growth area of the label industry.”
The company intends to transfer technology from the European operations to CCL Label’s wholly-owned subsidiaries to serve customers in North and Latin America and Asia. This includes a Cdn$8 million investment in its South Dakota facility. CCL has 7,000 employees and operates 33 production facilities in North and Central America and Europe.
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