Asian packaging firm Scientex (SB Group) has launched a bid for Great Wall Plastic and Great Wall Packaging for 283.2m Malaysian Ringgits (RM) (€71.6m).
Subject to shareholder and regulatory agreement, the move would allow SB Group to break into the food and beverage sector for the first time.
GW Plastic is principally involved in the manufacturing and marketing of blown plastic film packaging products for various applications such as food and beverage; electrical & electronics; pharmaceutical; agricultural; toiletries and industrial.
The main markets for its products are Malaysia; Denmark; Singapore and Thailand and approximately 35% of its revenue is derived from these export markets (excluding Malaysia).
GW Packaging is principally involved in the manufacturing and marketing of cast plastic film packaging products for various applications such as logistics; industrial; and food & beverage.
Its principal markets are mainly Japan; Australia; New Zealand; Korea; and Singapore, and approximately 97% of its revenues are derived from these countries.
“Upon completion of the proposed acquisitions, the enlarged SB Group expects to benefit from the increased and larger market share in the manufacturing of packaging products,” said SB Group.
“With the larger market share, the enlarged SB Group is expected to increase its customer and supplier base, enhance its product range and sustain competitive advantages in the manufacturing of packaging.
“The proposed acquisitions will enable the enlarged SB Group to expand into a new market segment, namely food and beverage …”
Food and drink resilience
The company made the move to take advantage of the food and drink sector’s resilience to the economic downturn, it said.
SB Group said once purchased, the businesses offered considerable synergies with its existing operations.
Market analysts such as Visiongain and Global Industry Analyst were predicting strong growth in flexible plastic packaging for the next four years at least, said SB Group.
At home consumption
“A key trend that has been beneficial to growth has been a shift by the consumer to consumption at home.
“In an attempt to save money, many consumers are attempting to re-create the dining out experience at home, with intelligently packaged ready meals. As such plastic packaging applications are increasing in the food and beverage sectors.”
Traditionally, the US and Europe were the centres of demand for plastic packaging products due to high living standards and consumer demand for convenience, said the firm.
However, in the coming years, emerging countries in Asia-Pacific and Latin America were expected to fuel growth due to high economic growth rates in these regions, SB Group added.