The parent company of Green Line Polymers acquired the parent company of Champion Polymer Recycling in a purchase valued at over $1 billion.
Hilliard, Ohio-headquartered Advanced Drainage Systems (ADS) bought Old Saybrook, Conn.-based Infiltrator Water Technologies (IWT) for $1.08 billion, according to a press release.
ADS makes thermoplastic piping for commercial, residential, infrastructure and agricultural applications, with a focus on stormwater management. Founded in 1966, the company has 4,400 employees, 56 manufacturing locations and 32 distribution centers around the world.
IWT makes products for on-site septic systems used primarily on residential properties. The company has 479 employees. IWT’s manufacturing footprint, totaling 400,000 square feet, is spread across seven facilities in multiple states.
The deal brings two huge plastics reclaimers under the same corporate structure: Green Line Polymers, a subsidiary of ADS, and Champion Polymer Recycling, which is owned by IWT.
Green Line Polymers recycles HDPE scrap for use in ADS’s Mega Green line of HDPE pipes, made of at least 60% recycled content. Plastics News described Green Line Polymers as perhaps the largest consumer of recycled HDPE in the U.S.
Located in Winchester, Ky., Champion Polymer Recycling purchases up to 150 million pounds per year of post-industrial and post-consumer PE, PP and PS. The company has 650,000 square feet of processing and warehousing space in Winchester. In February 2018, Plastics Recycling Update magazine featured Champion Polymer Recycling as its Reclaimer in Focus.
During a conference call and slide presentation on Aug. 1, ADS executives touched on the recycling aspects of the deal.
“ADS is poised to continue to leverage its scale and existing capabilities and Infiltrator’s expertise to expand its recycled inputs and continue to reduce its costs,” according to the slide presentation. The deal will lead to ADS increasing its consumption of recycled plastic by about 40%. It also lends ADS IWT’s expertise in material science, engineering, processing and procurement.
During the conference call with investors, ADS CEO Scott Barbour noted his company’s focus is on recycled PE, and the PP the company uses is virgin material.
“What we’re very excited about is being able to tap into the engineering and the recycling scale and competencies of Infiltrator to accelerate our use of polypropylene recycled materials,” he said on the call.
About 60% of IWT’s raw material purchases are recycled PP, 12% recycled PE, 5% recycled PS and 23% virgin resin. After the acquisition, 46% of the combined company’s raw material purchases will be recycled PE, 29% virgin PE, 14% virgin PP, 10% recycled PP and 1% recycled PS.
Companies’ financials
ADS, a publicly traded company, and IWT, a private company, have been doing business with each other for over 15 years. They started a joint venture called StormTech in 2003. In 2010, ADS bought out IWT’s ownership in the venture. In 2012, IWT acquired assets of ADS’ septic chamber business.
With the recent transaction, which was all in cash, ADS bought IWT from an affiliate of the Ontario Teachers’ Pension Plan and other stockholders, according to a press release. The transaction closed July 31. IWT CEO Roy Moore and key management staff will stay on to run IWT.
During the year ending on March 31, 2019, IWS had sales totaling $293 million and earnings of $96 million, for a profit margin of nearly 33%. During that same period, ADS had sales of $1.39 billion and earnings of $232 million, for a profit margin of nearly 17%.
So, if ADS had theoretically owned IWT during that time, the company would have had total revenues of about $1.6 billion and earnings of $328 million, for a profit margin of over 20%, according to the release.
