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Feb 12, 2017

Stronger together

With a recent management buyout, Dutch can maker pack2pack is optimistic about its future.

Evert van de Weg reports:
Located in the picturesque village of Halsteren, the Netherlands, is can and pail producer pack2pack, a company with a rich history within metal packaging. In 1942, a local smith named Frijters started producing coal scuttles and galvanised baths under the name of Plamentha. In 1968, this company started producing smaller tinplate packages. In 1970, the UK company Blagden Packaging acquired the shares of Plamentha. For some decades after that, the company flourished as a mid-size supplier of these specific metal packages. In 2011, the leading US-based drum supplier Greif acquired Plamentha, and at that moment it became better known as pack2pack.

In 2014, the management buyout of pack2pack successfully completed a management buyout, backed by the Dutch investment company Gilde Equity Management. The manager of pack2pack who has been most actively engaged in the changes in the last few decades is Chris Paelinck, CEO.

How change of ownership can revitalise

Chris Paelinck makes it very clear that the management of pack2pack is very happy to have the right investment company on board supporting the buyout, and how beneficial it has been in their case. "Quite soon after the takeover by Greif we found that we did not really fit into their core portfolio of Greif with its heavy focus on drums and IBC's and only negligible commercial interests in small metal packages," explains Paelinck. "However, we had to move with the times. We were faced with overcapacity and therefore we wanted to grow and expand our geographical markets."

"Our management team discussed the issue thoroughly and we got more and more convinced that an independent status would be a step forward for our company, providing we would have a solid financial backing from an appropriate investment company. We were convinced that we had a lot to offer to an outside investor."

"Financially our company is in good health, it has been profitable over the years and there is a wealth of expertise within the management team and the total workforce. People like to work for our company and our team has an average of 16 years of working for us".

With the decision made, the management of pack2pack then got into contact with the Dutch private equity firm Gilde Equity Management. Gilde focuses exclusively on the Benelux mid-market segment and invests in international companies in the Netherlands and Belgium. With their experience of over 30 years in investments in a large number of mid-sized companies, they turned out to be the right partner in the MBO process according to Paelinck.

"They are a strong partner and they know exactly how to deal with the delicate process of acquiring a company," he says. "They sit with you at the negotiation table, they are well respected by big companies because of their long experience in deals like this and they have strong financial funding."

The new pack2pack set-up started to work out very well. A clear example of this is where for many years they had to delay the investment in a new welder which was necessary to ensure a better welding quality, and a higher efficiency and shorter set-up time in the production line for an important can size. Paelinck takes up the story: "Soon after the buyout we had a meeting with the Gilde team about our proposed investment and in that same meeting the decision was taken - go ahead they said immediately! In September 2015, the new Canman body welder was installed and it has proven to be a very good investment."

When we walked through the plant, Paelinck took me to a 153mm can line, where engineers were busy installing a completely new back-end part, called Bodypack, supplied by the French company Sabatier, part of Soudronic. This investment will lead to higher speeds, better quality and higher efficiency.

"That is the nice thing about Gilde," Paelinck says. "The team members think along with you and they are open to investments as soon as you can show they make sense. You can imagine how extremely motivating it is for our total work force to see these investments now moving into our plant. We have been working for two years in this new set-up and we have reached the financial targets we set ourselves in our business plan. It gives so much satisfaction and appetite to do better, especially as a company."

The markets and plans for the future

Pack2pack is supplying cans and pails for paints, chemicals and food. Paelinck is rather satisfied about the volume development for his company in the market segments: "In the last two years, all three market segments have shown growth, through the food market for our can business is quity volatile, moving as it is in line with the moves in tender markets like ghee for example. We really want to grow our business within Europe in the coming years and our investments are in line with that goal. Not only did we increase the capacity of the pail assembling line, but we also took some bottle necks away on our production line for diameter 153mm cans."

"Another goal we want to reach by investments like this is to avoid working in three shifts instead of two shifts on certain lines, as this puts the organisation under too much pressure and is relatively expensive. One of our strong points is that we produce everything ourselves in-house. We coat, we print, we make the cans or pails and we make the components to complete the cans or pails."

"In 2017, we are going to further invest in the production of components like bottoms and end, rings for paint cans and the assembly of the plastic handles. We are also investing in equipment that enables us to offer stackable cans if it is required by the customer. All this will lead to a broader assortment which we can offer to new and existing customers."

Pack2pack recognises the importance of supporting customers with various services. "We offer actively a wide range of supporting services for the filling lines of our customers," he says. "For that purpose we team up with our customers and we look together for the best solution. Regularly we have developed tailor-made closing equipment for specific customers. Then, together with a manufacturer of closing equipment, we design a new manual or semi-automatic closing device. These kinds of support are highly appreciated by our customer."

Optimistic about the future

Paelinck is quite positive about the position of pack2pack as he explains: "Our own longstanding expertise and the strong backing of our partner Gilde Equity Management enables us to realise further growth, not only in our home market but also abroad. We operate with our metal packaging business in a positive environment with our proven recycling record of 95 per cent. Talking about the Circular Economy, what more do you want? As a member of the Dutch association MVN, and in turn member of Empack, we actively support their efforts like the current awareness campaign 'I am recycling cans'. The years ahead lookk good for our company."

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