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| RadiciGroup strengthens its presence in the United States market: acquisition of American compounder MDE successfully concluded |
RadiciGroup officially concluded the acquisition of American compounder Michael Day Enterprises Inc. on 15 January. This investment will enable the Group to gain market share and strengthen its position in the American plastics market, moving another step ahead in its globalization process.
RadiciGroup has been engaged in the plastics business since 1981 and subsidiary Radici Plastics USA Inc. has been operating in the United States for more than ten years. The RadiciGroup Plastics Area has 400 employees worldwide; it forecasts 2010 sales of EUR 180 million.
“This acquisition is certainly an important achievement for our Group,” said Luigi Gerolla, CEO of RadiciGroup Chemicals and Plastics. “Guided by a development strategy with a global focus, we started to take the first steps towards internationalizing our organization in 1997, with the opening of our first production plant in Latin America. To RadiciGroup, globalization does not mean simply delocalizing production activity outside of Italy. On the contrary, we have continued to invest in our Italian operations in terms of both technology and human resources, and we will continue to do so in the future.”
“Thanks to this acquisition,” Gerolla continued, “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. 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.”
“We have been in the United States since 1998,” said Danilo Micheletti, Chief Operating Officer of RadiciGroup Plastics North America. “We 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; 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 network and ten year’s of local market experience. MDE is well entrenched in the American auto market (American and Japanese brands) and has 250 active automotive certifications that can be used worldwide, in Asia in particular, which will allow us to join the global pool of automotive suppliers.”
“The process resulting in the acquisition of Michael Day Enterprises — a company in Chapter 11 bankruptcy (a procedure governed by the American bankruptcy code, which both Chrysler and GM went through) — was quite long,” said 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.”
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