(By Balaseshan) AEP Industries (NASDAQ: AEPI), a manufacturer of plastic packaging films, said it along with its Canadian subsidiary -- AEP Canada Inc., has agreed to buy films business from Transco Plastics Industries Ltd.
The business purchased includes the machinery and equipment and related assets necessary to manufacture the performance films, specialty bags and industrial films of Quebec company, Transco.
The transaction has a purchase price of about $5.3 million, excluding a one-year commission and transition service costs, and is expected to gain about $30 million in annual net sales from Transco's former customers.
AEP said it intends to relocate the manufacturing activities associated with the Transco businesses to its strategically located manufacturing sites throughout North America.
The company said this is a compelling investment opportunity for AEP that will gain meaningful business to it and deliver a solid return on invested capital.
"With Transco we will expand our already robust presence in the plastic packaging industry and enhance our suite of products. We are pleased to capitalize on the opportunity to acquire the Transco assets and create additional value for our shareholders," said Brendan Barba, Chairman, President and Chief Executive Officer of AEP.
The company manufactures and markets a range of polyethylene and polyvinyl chloride flexible packaging products, with consumer, industrial and agricultural applications. Its plastic packaging films are used in the packaging, transportation, beverage, food, automotive, pharmaceutical, chemical, electronics, construction, agriculture and textile industries.
AEPI is trading up 0.90% at $63.60 on Monday. The stock has been trading between $21.47 and $64.06 for the past 52 weeks.