One of the benefits or detriments of sitting as a trade analyst is the obliteration of one’s thinking process, as one meanders through the generation of prolific trade industry rumors. To wit and recently ; the rumored purchase of Ney Plastics by Falken Industries. I believe the rumor will materialize if only because it would add over 260 stock Items to Falken’s Bottle and Plastic Product Conceptions Offerings, and Greatly Expands its PET PVC Molding Capabilities.
Neither company will confirm nor deny anything – did you expect anything else ? But the industry and trades are not deterred. They are scuttle butting all over the place. There is no secret that global leader Falken Industries Ltd, best known for its Clean Plus® product conceptions and trading under symbol FLKI, is acquisition hungry for small complementary manufacturers. In fact it disclosed as much in a recent press release. Given that 60% of its product offerings are packaged in plastics of various ilk it is no wonder that Falken is demonstrating an interest – which as I said it will not deny, in acquiring a producer of PET PVC packaging. Ney is a perfect fit as a manufacturer and decorator of plastic bottles and containers primarily for the personal care, auto care, housewares, and food markets. It is also a blow molder of high-density polyethylene (HDPE) and polyethylene terepthalate (PET) bottles and jars for the personal care, pharmaceutical, nutritional supplement, and niche food and beverage markets. And finally it is one of the few remaining manufacturers of Polyvinyl Chloride PVC, product important to Falken’s more aggressive chemical formulations. In addition, Ney’s Technigraph decorating division provides environmentally-friendly container decorating services.
Manuel Garcia, communications officer at a recent press conference appointed just after spectacular results for YE 2011, to discuss 2012 opportunities and goals stated : “I can neither confirm nor deny the rumors, but will say that as of now, no expression of intend has been exchanged between the two companies. I will say however that Ney is a well-run privately owned company with attractive product lines in household chemicals and food packaging all of which would nicely complement Falken’s product conceptions and admittedly offer a number of important synergies.”
Come on – they have to be kidding ! This acquisition would be an important first step to developing new business in key industries which are critical to FLKI’s stated growth plan. Falken’s announced growth strategy is to include the acquisition of successful companies whose product lines and customer contacts open new opportunities for Falken’s global distribution network. Ney’s product lines greatly expand the number of products FLKI’s distributors can take to the market. Garcia when pressed, added : “The opportunity for cross-selling stock products into both companies’ existing customers would effectively provide some immediate sales opportunities and also help Falken move toward its long-term growth objectives.”
Ney, who is a Falken group supplier, has established a reputation in the industry for being a nimble, flexible and reliable supplier of PET, and HDPE packaging, and also manufactures some polypropylene and PVC items. Ney utilizes basic blow molding technologies, including Extrusion Blow Molding (EBM), Injection Blow Molding (IBM), Single Stage Injection Stretch Blow Molding (ISBM) and Two-Stage Stretch Blow Molding (also called Reheat and Blow, or RHB). The company also manufactures preforms on state of the art injection molding equipment to support its RHB operation or to sell preforms directly to end users. Ney’s 2-stage PET operations will be complementary to Falken’s recent investments in 2-stage blow molding.
Capprocon of Norway, is the usual advisor to Falken, but surprise surprise, they had no knowledge sufficient to confirm or deny !
Falken has admitted at past conferences that its current strategy is to more than quadruple in size over the next five years through a combination of key acquisitions and organic growth. I think that is an underestimation of the company’s potential growth for a large number of reasons, many of which are obvious by a quick tour on Google of the term “OTC : FLKI”.
John David is one of the nation's most respected expert analysts on the Automobile After-Market Industry. He holds appointments as a covering analyst with some of the world's largest players. He also conducts a private practice as a consultant in capital raises, mergers and acquisitions for small to medium size manufacturers in the consumer, professional and industrial chemical, wipe, wet wipe and car and vehicular care industries.
Falken Industries Ltd OTC : FLKI is a diversified industrial conglomerate that operates in Chemicals, Wet Wipe and Biodegradable Technology. Falken Industries Ltd is the concept behind more than 160 products distributed through a network of global platforms and the recipient of trade awards for innovations, biodegradability and environmental and health quality standards. As a reliable partner FLKI creates chemistry to help distributors and retailers in virtually all industries to be more successful. With its high-value products and intelligent solutions, FLKI plays an important role in finding answers to global challenges such as environmental protection, energy efficiency, and mobility.
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