PGI For Sale—Whose Turn Is It, Anyway?

By Karen Bitz McIntyre, Editor | May 6, 2010

This month, PGI—the world’s fifth largest nonwovens producer and its largest spunmelt maker—said its board was exploring future growth options for its shareholders which include but are not limited to the potential sale of the company.

Rumors surrounding the sale of this nonwovens producer have swirled around the industry for years, basically since it emerged from bankruptcy under the ownership of equity investment firm Matlin- Patterson in 2003. Still, the company officially announcing that the possibility of sale is being explored—in an official press release no less—is something else.

During its lifetime, PGI has gone through several incarnations. In the early 1990s, it bought up smaller producers transforming itself into a multinational company with myriad processing technologies and plants located around the world. Later that decade, the company began investing heavily in its Apex technology, presumably with an intention to target the apparel market, a plan that some blame for its financial woes of the early 2000s, which culminated with a bankruptcy filing and purchase by MatlinPatterson.

During the past five years, however, PGI has enjoyed an impressive period of growth as it has invested heavily in spunmelt technology for its core businesses of hygiene and medical applications. As recently as last month, the company said it would add a new line in Waynesboro, VA and earlier this year it began an ambitious European strategy through the acquisition of Telsaca in Spain.

So, why after all of this investment, would the company now say it could go on the selling block?

Maybe it is simply a matter of it being someone else’s turn to take a whirl with PGI’s assets. In the nonwovens industry, it seems, the answer to the call to make products “better, faster and cheaper” always comes down to consolidation.

Just look at Concert Industries. Like PGI, it faced some serious financial troubles a few years ago, only to enter bankruptcy, be purchased by an investment group that successfully turned it around and ultimately be sold to Glatfelter, a paper manufacturer who was keen to add Concert’s airlaid expertise to its existing assets.

So, will PGI’s new owner—if there ultimately is one—be someone on the fringe of the nonwovens industry maybe in the textiles or paper industry looking to diversify into new business areas or will another private equity fund try its hand at turning a profit in nonwovens? Based on past experience, it seems these investment types have been great at getting companies to be profitable but have done little to boost innovation in the industry.

Karen McIntyre

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