TriMas (TRS) to Acquire Rapak, Expand in Bag-in-Box Markets

TriMas Corporation TRS has signed an agreement to acquire the Rapak brand, including certain bag-in-box product lines and assets, from Liqui-Box.

In March 2019, Liqui-Box Corp., a global supplier of bag-in-box packaging, agreed to acquire DS Smith Plc’s DITHF Plastics Division. DS Smith is a leading provider of corrugated packaging worldwide. Its plastics division includes Rapak and Worldwide Dispensers business. Per the undertakings entered into by Liqui-Box with the U.K. Competition and Markets Authority (CMA), it is required to divest certain of DS Smith’s bag-in-box product lines, which overlap with Liqui-Box’s current product lines.

Consequently, Liqui-Box has entered into the agreement with TriMas per which, the latter has agreed to acquire the Rapak brand name for its use globally, and bag-in-box product lines used in dairy, soda, smoothie and wine product applications. The buyout will be closed following the successful completion of Liqui-Box’s acquisition of DS Smith Plc’s Plastics Division.

Rapak offers standard and custom designed bags and fitments for Bag-in-box suitable for a wide range of liquids. The Rapak brand name, and bag-in-box applications and products will improve TriMas’ packaging portfolio. This will not only enable the company to grow in the field liquid packaging solutions but also leverage its strength in advanced closure and dispensing technology. Further, this acquisition will add to its already diverse customer base.

Rapak bag-in-box and other products generated around $30 million of revenues in 2019. The bag-in-box market is projected to see a CAGR of 3.8% from $1.6 billion in 2019 to $1.9 billion by 2024. The growing need for innovative and sustainable packaging and increase in the consumption of alcoholic beverages in developing and developed economies will fuel growth. Further, ease of handling and transportation has made bag-in-box packaging an ideal choice for e-commerce retail.

TriMas will also obtain all global ownership rights for the Mustang wine bag-in-box dispensing products. The Mustang product line features an innovative bag fitment with the lowest oxygen transfer rates in the market. It is suited for wine and other bag-in-box packaging applications. Further, the acquisition will include the Autokap and Stericap brands and product lines, and the capacity to manufacture IntaSept filling machine products. TriMas will also be acquiring manufacturing facilities located in Indianapolis, IN and Union City, CA, and a new facility in the greater Chicago, IL.

TriMas’ strong balance sheet and track record of strong cash flow provides both ample capacity and flexibility to fund capital allocation priorities. In January last year, TriMas acquired Plastic Srl, a privately-owned manufacturer of polymeric caps and closures for home-care product applications. The buyout expands the company’s geographic presence and capacity in Europe. It will also added new products and bolster production capability.

In April 2019, TriMas acquired Taplast S.p.A., a designer and manufacturer of dispensers, closures and containers for the beauty and personal care, household and food packaging end markets, serving customers predominantly in Europe and the Americas. The buyout added to TriMas’ product offering and expanded geographic presence. These acquisitions, along with the announcement of the Rapak acquisition, are in sync with the company’s strategy to invest and accelerate growth of its packaging platform.

Price Performance

Shares of TriMas have fallen 8.4% in the past year compared with industry’s decline of 6.5%.

Zacks Rank and Stocks to Consider

TriMas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector are Northwest Pipe Company NWPX and Sharps Compliance Corp SMED. Both of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Northwest Pipe has an expected earnings growth rate of 19.5% for the current year. The stock has appreciated 48% over the past year.

Sharps Compliance has an estimated earnings growth rate of 767% for the ongoing year. In a year’s time, the company’s shares have gained 38%.

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