Greif Inc. is exiting a flexible packaging joint venture making heavy-duty woven polypropylene bags due to differences with its partner regarding future plans.
Proceeds from the sale of Greif's 50 percent share in the joint venture to Gulf Refined Packaging for $123 million will be used to pay down debt, the Delaware, Ohio-based company said.
Greif is an industrial packaging maker that uses a variety of materials, including plastics, metals and paper, with 250 locations in 40 countries.
The Flexible Products and Services, or FPS, joint venture manufactures, reconditions and recycles flexible intermediate bulk container bags. FIBCs are used to transport a wide variety of dry, flowable products, including agricultural, food, construction, petroleum and chemical products, as well as minerals, metals and plastic products. FIBCs, also known as big bags and bulk bags, can hold hundreds or even products weighing in the low thousands of pounds.
"While we have worked closely with our joint venture partner, each partner held different views of the appropriate path forward for the FPS business," Greif CEO Pete Watson said in a statement. "As a result, we entered into a process to determine a single owner and utilized our disciplined capital allocation framework that resulted in an agreement to sell our ownership stake to GRP for significant value."
Watson indicated the company has been involved in the joint venture for 11 years. Greif's website lists 26 FPS locations around the world, including one in Houston. Reconditioning of used FIBCs includes collection, inspection and replacement of document pockets and closures as needed at a production site in Moerdijk, Netherlands, Greif said on its website.
Greif expects the deal to close during the current fiscal quarter.
Greif makes a variety of industrial packaging products using plastics, including jerrycans, plastic drums, intermediate bulk containers with rigid plastic, shipping container liners, closures and covers.
Grief entered the joint venture in September 2010 with Dabbagh Group Holding Co. Ltd. of Saudi Arabia and its subsidiary National Scientific Co. Ltd., later renamed Gulf Refined Packaging for Industrial Packaging Co. Ltd., according to the company's latest annual report.
The joint venture had $19.6 million of cash and cash equivalents as of Oct. 31; inventories worth $58.5 million; and properties, plants and equipment valued at $25.8 million.
"Net income attributable to the noncontrolling interest in the Flexible Packaging JV for the years ended Oct. 31, 2021, 2020 and 2019, were $7.9 million, $6.4 million and $12.4 million, respectively," the annual report states.
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