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| RadiciGroup buys Ohio compounder |
January 18, 2010 The Italian nylon producer concluded the acquisition of American compounder Michael Day Enterprises on 15 January. Founded in 1981 by Michael Day, MDE compounds engineering resins, including nylon, acetals, polycarbonate and ABS. The Ohio firm employs 84 and posted sales of $44 million in the 2009 fiscal year. “The process resulting in the acquisition of Michael Day Enterprises was quite long - explained Sergio Cassotti, RadiciGroup M&A Manager -. The pre-negotiation stage started in October 2008, after which the preliminary purchase agreement was negotiated with the seller (MDE) and main creditor. Then due diligence was performed on the target company. The next step last November was Radici Plastics USA Inc.’s being named the stalking horse bidder, or preferred buyer, in the Chapter 11 auction process concerning MDE". After other potential purchasers were excluded from the auction because their offers did not meet the minimum requirements, on 8 January the U.S. Bankruptcy Court of the Northern District of Ohio approved the sale order for acquisition of MDE by Radici Plastics USA. Finally, on 15 January, the closing was held, and starting the next day MDE officially became the property of RadiciGroup. "Dealing with and concluding this transaction, especially during the difficult economic period from 2008 up to today, has been a source of great satisfaction for me and the rest of the team working on the project.”, Cassotti added. RadiciGroup has been in the United States since 1998. RadiciGroup Plastics North America started out with a production activity that was discontinued in 2005 following a key change in strategy. "We wanted to concentrate on specialty products with a higher technological content, but our plant wasn’t suitable for such production - said the CEO Danilo Micheletti - So we began subcontracting the work to local third parties. That strategy was developed in response to customer demand and, since 2005, has led to a growth of 45% for Radici Plastics USA. Now, with the MDE acquisition, we can take advantage of the synergies from the combination of our competence, know-how, and vertical integration of raw materials, and the American company’s sales". “Thanks to this acquisition we will be present locally in a notoriously conservative market that demands products made in the USA, and we will be able to acquire sizeable market share - said Luigi Gerolla, CEO of RadiciGroup Chemicals and Plastics -. Moreover, we will become the owners of a significant number of American automotive certifications, which are vital to start new projects, especially in the United States. Although the auto is a mature product, the automotive industry is still a strategic one, and going forward the US auto industry needs to be a dominant force not only in the domestic market, but also on the international level. The US government intervention in the auto market was without a doubt more well thought out than in Europe: it was aimed at rationalizing plants and capacity and promoting green policies that will lead to significant changes, starting with lighter autos featuring more and more plastic components. This is an important factor, because our products find application in those very components. Besides the United States, among our next objectives is the expansion of our presence in China — which in the future will become our second most important market after Europe — and India, together with the valuation of business opportunities in emerging markets, such as Southeast Asia and Russia.” The RadiciGroup Plastics Area has 400 employees worldwide; it forecasts 2010 sales of EUR 180 million. Source: Polimerica.eu |
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