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AptarGroup (ATR) to Buy 49% Stake in BTY, Expand in Asia

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AptarGroup, Inc. (ATR - Free Report) has signed an agreement to acquire 49% equity interest in three related BTY companies in China in a bid to capitalize on the high-growth Asian color cosmetics market. The three companies, which are collectively referred to as BTY, are Suzhou Hsing Kwang (“SZHK”), Suqian Hsing Kwang (“SQHK”) and Suzhou BTY (“BTY”). These companies are leading manufacturers of high quality, decorative metal components, metal-plastic sub-assemblies and complete color cosmetics packaging solutions for the beauty industry.

Founded in 2002, BTY is a group company that is engaged in design, development and manufacturing of primary packaging containers for color cosmetics, skin care and fragrance markets. It has dedicated aluminum anodization facilities in Suzhou and Suqian in Jiangsu Province. Courtesy of its advanced and imported high tonnage precision stamping machines, BTY supplies several brands with customized and stock metal packaging parts by automated progressive stamping and transfer stamping.

The three facilities employ 900 people and are located close to Aptar’s manufacturing facilities in the Suzhou, Jiangsu Province in China. It is also located close to leading cosmetics manufacturing players that serve the local, regional and global markets. Consequently, this buyout will add complementary and distinctive capabilities to AptarGroup including high speed stamping and anodization, metal and plastic decoration and differentiated lipstick masstige mechanism design and manufacturing.

The deal is expected to close by the end of this year, subject to customary regulatory approvals. Financial details will be disclosed upon successful completion of the transaction. The purchase will be funded with available cash on hand.

AptarGroup remains committed to expansion of its business through acquisitions in a bid to broaden the scope of its technologies, geographic presence and product offerings. In sync with this, the company acquired CSP Technologies, a leader in active packaging technology based on proprietary material science expertise, for an enterprise value of $555 million. In June, AptarGroup acquired Nanopharm and Gateway Analytical, which is likely to expand its service portfolio that supports pharmaceutical and biotech customers.

Previously, the company acquired Reboul and several innovative companies, including Stelmi, Mega Airless, and purchased a minority investment in Kali Care, Inc. Last year, it also expanded partnership with Propeller Health and made a strategic equity investment in the company. These initiatives will drive growth.

AptarGroup is also poised to gain from recent innovative product launches. Further, the company will benefit from its business-transformation plan to drive the top line, boost operational excellence, enhance approach to innovation and improve organizational effectiveness.

Share Price performance

The company’s shares have gained 12.1% over the past year, against the industry’s decline of 27.7%.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Sealed Air Corporation (SEE - Free Report) , Cintas Corporation (CTAS - Free Report) and AGCO Corporation (AGCO - Free Report) . While Sealed Air sports a Zacks Rank #1 (Strong Buy), Cintas and AGCO carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sealed Air has a projected earnings growth rate of 11.2% for the current year. The stock has gained 9% in a year’s time.

Cintas has an estimated earnings growth rate of 12.74% for 2019. The company’s shares have rallied 39% in the past year.

AGCO has an estimated earnings growth rate of 30.14% for 2019. The company’s shares have rallied 23% in the past year.

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