NEW YORK, October 1, 1998 - Castle Harlan Inc., the New York merchant bank, announced today the formation of a holding company, StackTeck Systems Incorporated, the largest independent plastic injection mold-maker in North America with expected 1998 sales of $40 million.
Castle Harlan said StackTeck Systems consists of two plastic injection mold manufacturers - Tradesco Mold Limited of Toronto, and Fairway Molds, Inc., of Los Angeles, which was acquired in a $12.8 million transaction that coincided with the formation of StackTeck Systems.
Castle Harlan Partners II, L.P., a private equity limited partnership formed and managed by Castle Harlan, will own 80 percent of the combined enterprise, and 34 employees and members of management of Tradesco and Fairway will own 20 percent. The Castle Harlan partnership, together with Tradesco's management, acquired Tradesco in 1996.
Robert Wages, the Castle Harlan director who structured the transaction, said, "the formation of StackTeck Systems in conjunction with the acquisition of Fairway represents a significant step toward Castle Harlan's goal of creating the leading worldwide marketer and manufacturer of specialty plastic injection molds."
He noted that Tradesco makes molds for such plastic items as stadium and yogurt cups, other similar containers, lids and cutlery. Its worldwide list of customers includes Unilever, Nestle and Procter & Gamble, and it anticipates 1998 sales of more than $24 million, up from $21.3 million in 1997.
Fairway, which expects 1998 sales of more than $15 million (versus $12.5 million in 1997), sells molds to customers in the United States, Europe and South America. Many of Fairway's customers are Fortune 500 companies.
Wages said that Tradesco and Fairway are both solid businesses with strong reputations for quality and the potential for substantial growth. Their operations will now be enhanced by their new ability to share marketing and technical resources. StackTeck Systems will also be looking to grow through acquisitions.
Wages said that David Brown, the president of Tradesco, will become president of the holding company, and Thomas E. Smith, a 20-year member of the Fairway management team in charge of all manufacturing at Fairway, will become president of Fairway.
Edward P. McKeown and James C. Hagin, who were among the founders of Fairway and who owned 100 percent of the company, will remain as consultants.
Castle Harlan Partners II is one of several investment funds totaling more than $1 billion that have been organized by Castle Harlan, Inc., and that represent major corporate and public pension funds, college endowments, foundations and individual investors. Since Castle Harlan's founding in 1987, the firm has completed acquisitions exceeding $3.5 billion.
Castle Harlan's portfolio companies have included Delaware Management Company, a Philadelphia money-management firm with more than $32 billion in assets under management; Indspec Chemical Corporation, a specialty chemical manufacturer; Smarte Carte, the world's leading airport luggage cart rental company, and MAG Aerospace, the leader in worldwide manufacture of aircraft sanitation systems.
Currently among its portfolio companies are Commemorative Brands, Inc., one of the leading manufacturers of class rings and other specialty jewelry under the ArtCarved and Balfour brand names; and Statia Terminals Group N.V., one of the world's largest independent marine terminal companies that serve the petroleum industry.
Castle Harlan was founded by John K. Castle, a pioneer in institutionalizing private equity investing through limited partnerships and the former president and chief executive officer of Donaldson, Lufkin & Jenrette, the investment banking firm, and by Leonard M. Harlan, founder and former owner and chairman of The Harlan Company, a diversified real estate and corporate finance advisory firm.