NEWTOWN SQUARE, Pa.—When Graham Partners completes its acquisition of the flexible converting business of Berry Global Group, it will be reuniting the leader of its Advanced Barrier Extrusions L.L.C. (ABX) with some familiar operations.
That familiarity also helped the companies through the acquisition process.
ABX CEO Larry Goldstein spent 30 years with Berry before joining the Graham company in 2018 and he is "looking forward to working again with many familiar faces to achieve future growth and profitability."
"New owners often don't totally understand the business they're acquiring, but in this case we do," Goldstein added. Familiarity with the plants also helped ABX and Graham overcome COVID-19-related travel limits when completing the deal.
The deal includes six printing and laminating flexible packaging facilities that had been part of Berry's North American extrusion, converting and coating business. Graham of Newtown Square, Pa., will combine the Berry business with Advanced Barrier Extrusions (ABX) L.L.C., its own flexible packaging unit based in Charlotte, N.C.
The plants involved in the sale are in Columbus, Ga.; Homer, La.; Macedon, N.Y.; Schaumburg, Ill.; and Milwaukee and Pewaukee, Wis. Around 700 Berry employees are moving to ABX in the deal.
Graham acquired ABX in 2018. Prior to the Berry deal, ABX operated two plants and employed about 100. The combined business will operate under the ABX name, officials said in a Dec. 1 news release.
The Berry business being acquired has annual sales of more than $200 million. Graham officials said that the deal allows ABX to expand geographically and add categories such as personal care and health care packaging.
The deal also creates a vertically integrated business with multiple extrusion technologies, printing, laminating, bagging, coating, finishing and niche packaging operations, they added.
Several members of the ABX leadership team previously worked for Evansville, Ind.-based Berry and had oversight of the plants being acquired. Their commercial and operational insights "should jump-start Graham Partners' value creation initiatives," officials said.
They added that ABX is benefiting from several consumer trends, including a shift toward convenience, on-the-go lifestyles, increased spending on fresh foods and heightened focus on food safety and sustainability.
"Combined, the strong R&D cultures of these two businesses offer exciting possibilities for the future," Graham Managing Principal William Timmerman said in the release. "We intend to sustain and accelerate their proven track record of developing innovative new products to better serve customers."
Graham CEO Steven Graham said that the deal "should benefit from our extensive experience building premier packaging businesses, as well as our strong network of contacts within the industry."
"In particular, we are enthusiastic about having Larry and the ABX team provide renewed strategic direction and leadership to this business," he added.
Berry executives Michelle Wilson and Kurt Klodnick are joining ABX as part of the transaction. Wilson will be the firm's Chief Commercial Officer, with Klodnick serving as CFO. ABX Chief Operating Officer Jeff Godsey also was with Berry for 29 years.
In a Dec. 4 phone interview, Goldstein said that the Berry plants "are a good fit for what we have. ... They add capabilities for some new products and capacity in other areas."
The plants were part of a business that Goldstein ran for part of his time with Berry. They provide ABX with more cast extrusion options, as well as blow extrusion, he said.
In addition to selling into food packaging markets, Goldstein said the business being acquired makes packaging for COVID-19 test kits, which have been in high demand.
Combining ABX with with Berry's flexible packaging converting business "appears to make a lot of sense, both strategically and from a synergy standpoint," said John Hart, Managing Director of P&M Corporate Finance in Southfield, Mich. P&M previously worked with Graham on a recapitalization of packaging firm Comar L.L.C., which Graham sold in 2018.
Graham Partners has completed more than 130 acquisitions since being founded by Steven Graham in 1988. The firm has raised approximately $3.4 billion since its inception. Graham also currently owns packaging firm VPET Plastics of Fontana, Calif.
Berry Global employs 47,000 worldwide and ranks as one of North America's largest plastics processors. The firm posted sales of $11.7 billion in its 2020 fiscal year, which ended Sept. 26.
The flexible packaging deal is something of a full circle move, since Graham was co-owner of Berry—then known as Berry Plastics—from 2006 until the firm went public in 2014.
The plants being sold had been part of Berry's Health, Hygiene & Specialties and Engineered Materials units. Sales in those units were down 6-8 percent for Berry's 2020 fiscal year, which ended Sept. 26.
Berry's overall sales for fiscal 2020 were up 31 percent to $11.7 billion. The firm's profit jumped 38 percent to $559 billion. Most of Berry's overall 2020 sales growth was connected to its $4.4 billion acquisition of global packaging firm RPC Group plc in 2019.
On Wall Street, Berry's per-share stock price began the year around $45 but fell under $30 in March amid COVID-19 shutdowns. Since then, it's rebounded and was near $54.60 in early trading Dec. 3. That price represents an increase of more than 20 percent compared to Jan. 1.