BETHEL — GW Plastics, one of the largest manufacturing companies in Vermont, said it had agreed to be acquired by Swedish company the Nolato Group in a transaction Nolato valued at about $230 million.
The surprise announcement of the deal Thursday, which Nolato said it expects to complete by September, will transfer ownership of a company whose Vermont roots go back 65 years into the hands of a global company approaching $1 billion in revenues.
GW Plastics, known as an original equipment manufacturer, or OEM, principally makes plastic medical devices and instruments under contract for medical companies. Nolato disclosed that GW Plastics has about $207 million in annual revenues and employs about 1,100 people at seven locations around the world. In Vermont, the firm currently employs between 400 and 450 workers at plants in Bethel and Royalton.
Brenan Riehl, chief executive of GW Plastics, said in an interview Thursday that the two plastic manufacturers fit well together, and being part of Nolato will ensure GW Plastics’ future and strengthen its position in global markets.
“This gives us access to capital and will help to fund our growth,” Riehl said. “Nolato is in the same business we are. They are an extremely successful company and we align exceptionally well with their business and culture. They embrace the same vision we do.”
Despite being owned by another company, GW Plastics will “continue to operate independently,” Riehl said.
Typically, when longtime family-controlled firms sell out to a foreign company, employees worry about their jobs and local communities fear the new owners will abandon them. Riehl sought to allay those concerns.
“No jobs are going to be lost. We will stay in Vermont. Current leadership intends to stay with the business,” he said. “We have no intention of changing, shutting down any facilities or changing the organization of the business.”
Nonetheless, Riehl acknowledged that “there comes a time when ownership looks for some level of liquidity” — e.g., exchanging hard assets for cash — although he said he and company officials “were not actively trying to sell the company.”
“We were approached. ... we really worked hard to find the right partner,” he said
Nolato chief executive Christer Wahlquist said GW Plastics represented “an ideal strategic combination” with Nolato, especially by giving the Swedish greater access to the North American market for medical devices (the medical market accounts for four-fifths of GW Plastics’ business, according to Nolato, which has been growing at 10% annually).
Wahlquist praised GW Plastics as “very much like a family-controlled company with a long-term strategy for growth.”
GW Plastics has been something of an anomaly in a state with a reputation as inhospitable to manufacturers and business.
While other manufacturers have found it inefficient to operate in Vermont, citing plant heating costs, insufficient workforce, taxes and land use laws, GW Plastics regularly expanded plant capacity in the state, most recently last year adding a $10 million, 30,000-square-foot expansion to its Royalton facility.
“GW has put a lot of time and money into building and training here,” said Bob Haynes, executive director of the Green Mountain Economic Development Corp., which is helping to coordinate an EPA grant to clean up a brownfield site in Bethel adjacent to GW Plastics plant that the company will use for expansion.
He noted that GW Plastics has been active in supporting tech education programs at Vermont Technical College and the Randolph Technical Career Center, which have worked as a feeder of skilled workers for the company.
“They are really the poster child of why anyone would want a company like them in their community,” Haynes said.
But the difficulty in finding qualified workers in Vermont — and the additional challenge in keeping them — has forced GW Plastics to look afield to other states such as Texas and Arizona and other countries such as Mexico, Ireland and China to locate the majority of their employees.
In recent years the company has also had to build overseas plants to be closer to their foreign customers — Ireland for Europe and China for Southeast Asia.
Nolato said the $230 million acquisition price for GW Plastics included up to $46 million in “contingent consideration” and that $210 million will be paid “upon transfer of ownership.” The company said about one-third of the cost would be funded by cash and about two-thirds by debt.
“The ownership of GW believed it was always essential for GW to be left in good hands following the inevitable transition of ownership that most privately held companies must face,” Riehl said. “We worked hard to find the right long-term strategic partner for GW to allow us to continue confidently into the future. I am personally delighted with this outcome.”
Contact John Lippman at jlippman@vnews.com.