Plastic film producer RKW gains US foothold with Danafilms buy

By Jane Byrne

- Last updated on GMT

Related tags North american market Mergers and acquisitions

Leading European plastic film producer, RKW, has acquired US barrier film and label manufacturer Danafilms in a move that it claims will give it greater access to the North American market.

The financial details of the deal were not disclosed.

Massachusetts based Danafilms produces lamination, label, lidding and barrier films. Its key customers are in the converting segment of the plastics industry and serve the food and beverage sector as well as other industries. The packaging supplier is also ISO certified and produces both mono- and up to 7-layer co-extruded films.

RKW and I see exciting opportunities to better serve existing customers and introduce Danafilms to new customers,”​ said president of Danafilms, Sherman Olson.

RKW CEO, Roland Roth, said that the buyout of Danafilms represents a ‘valuable addition’​ to the company, instantly providing the European group with strategically located up-to-date facilities serving the North American market. The US company has continually expanded its manufacturing capacity, recently completing a substantial addition to its Kentucky plant.

Alexandra Jaranilla, director of marketing and communications for RKW, told that challenges around logistics, a lack of local production sites and the resulting lack of proximity to customers were some of the barriers to entry for the supplier in the North American market prior to the acquisition to Danafilms.

She said that Danafilms’ food and beverage customers will benefit from the affiliation with RKW through an "enlarged product portfolio, and the technical expertise from both companies (over 40 and 50 years of experience)."

According to Jaranilla, the US firm's appeal for RKW lay in such factors as its "experienced workforce and excellent management team, excellent reputation, local manufacturing facilities, high-quality products, and state-of-the art technologies."

The German polyethylene and polypropylene film manufacturer, which has an existing sales office in Georgia, added that under the RKW decentralized management structure, customers will continue to deal with existing relationships and its products and services will be added to Danafilms’ portfolio.

RKW currently has 19 facilities throughout Europe, Egypt and Vietnam and serves the consumer packaging, industrial films and packaging, agricultural films and nets as well as hygiene and medical markets.

Takeover talk

The Danafilms acquisition follows the recent unveiling of other planned buyouts in the packaging arena by leading suppliers, with the RPC Group last month revealing plans to acquire Superfos for €240m (₤205m) in a bid to boost its product portfolio, technical know-how, and geographical reach.

Superfos president and CEO Hans Pettersson said the takeover proposal would be brought before its shareholders at the end of January.

UK-based RPC forecast the deal to acquire the Danish injected moulding rigid plastic packaging producer for the food and non-food sectors would be completed in early February 2011 and could add at least ₤10m annually to its balance sheet by 2014.

RPC said the takeover, which will be subject to regulatory approval, would strengthen its capabilities and competitiveness in the open top filled injection moulded plastic packaging market. It also highlighted that it would broadened its product range across new geographical markets and allow it to enter higher growth sectors.

December also saw Silgan Holdings announcing that it had reached a definitive agreement to buy the food can operations of Austrian company Vogel & Noot for €250m as part of a strategy to expand into Central and Eastern Europe (CEE).

The US-based firm said it expected to close the deal in the first quarter of 2011 – subject to a price adjustment for the net debt and financial performance of Vogel & Noot, and approval from regional competition authorities.

Assessing acquisition potential

Meanwhile, Huhtamaki, following the completion of the sale of its European rigid plastics operations to Island Acquisitions S.a.r.l for €52m last month, immediately served notice of its expansion plans citing an acquisition fund of around €300m.

CFO of the Finnish packaging group, Timo Salonen, told in late December that the company was now free to concentrate on growing both organically and through takeovers.

“In the two years since we announced our rigid packaging review we have built up considerable financial strength and freed up around €160m,”​ he added. ”Now we have accrued between €200-300m for takeovers across flexible packaging, moulded fibres and food service and we are currently screening acquisitions. Work began on this some time ago but we cannot predict outcomes."

The aim was to make some purchases in 2011 but the company was also planning to focus on organic growth, said the CFO.

Related topics Processing & Packaging

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