Intertape Polymer Group (IPG) has closed on its earlier call option to purchase a remaining 26% stake in Indian packaging tapes manufacturer Powerband Industries for $9.9m.
Image: Intertape Polymer has closed option to acquire outstanding stake in Indian firm Powerband. Photo: courtesy of rawpixel / Unsplash.
Intertape is said to hold the option under shareholders agreement with the minority shareholders of Powerband.
Once the transaction is completed, Intertape will own all of the issued and outstanding common shares of Powerband, subject to regulatory approval in India.
Earlier this year, the company transferred all management responsibilities to an IPG-appointed management team to avoid impact on day-to-day operations.
With around 200 full-time employees, Powerband has one operating facility in Daman of India.
IPG announced an expansion plan for Powerband, following the acquisition of a controlling interest in Powerband in 2016.
The expansion plan is comprised of the construction of a new greenfield facility in Dahej of India, with an investment between $18m and $20m.
The project is being designed to manufacture carton-sealing tape, which will complement the bundle of tapes that Powerband exports to customers in North America and Europe.
The facility, which is currently in the final phase of construction, is expected to be fully completed in the first half of 2019.
IPG president and CEO Greg Yull said: “By exercising our option, we have simplified the governance structure of the Powerband subsidiary. Most importantly, the transaction provides us with a 100% interest in the cash flows from the business.
“Acquiring a controlling interest in Powerband in 2016 provided us with additional capacity for acrylic carton-sealing tapes in a low-cost manufacturing region with the goal of exporting these competitively-priced tape products to North America and Europe.
“Since that time, having this overseas asset has enabled us to expand our market share in North America and negotiate better terms on raw materials for our US production of similar packaging tapes.”
Intertape Polymer is engaged in the development, manufacturing and marketing of various paper- and film-based pressure sensitive and water-activated tapes, polyethylene and specialized polyolefin films, protective packaging and woven coated fabrics.
The company also produces and complementary packaging systems for industrial and retail use.