Medica Packaging has changed hands in a management buyout led by managing director Gerard Harford and finance director Mark Stokes.
The new backer is Harwood Private Equity, a finance group with the “financial strength and depth to allow Medica to continue to grow and meet the ever demanding needs or our customers,” says Harford. Harwood has acquired the business from Sullivan Street Partners, which had funded a buy out from Benson Group in 2014 after its takeover by Graphic Packaging International.
Harford was brought in to become managing director in 2016, having led Storey Evans to its acquisition by Contego Healthcare before joining Essentra. Then CEO John Bath became chairman.
GPI had acquired the business when it bought Benson Box for its FMCG carton strength. It was not interested in a pharmaceutical cartons specialist, even if as the third largest UK supplier it was the natural second choice for a number of larger buyers with a dual supply strategy. It has also become a key supplier to smaller drug producers where volumes are beneath those appealing to the international pharma packaging specialists.
The deal was completed just before the Christmas break. “We believes this presents a great opportunity to take the business to the next stage in its development and to build on the progress that has been made under the stewardship of Sullivan Street Partners,” says Harford.
Sullivan Street says that Medica had been neglected by Benson, which had bought the Crewe business from the Wellcome Trust. Benson had used the operation as an over run facility for its factory in Bardon, Leicestershire, which had kept the business afloat.
Under the care of Sullivan Street’s partners Layton Tamberlin and Richard Sanders as directors, Medica has moved from a significant loss making position to being profitable at an Ebitda level and put the business on a stable financial footing. It has used cash generated in the business to fund capital investment, improve the factory (having secured the lease on the building). Sullivan Street says that Medica now “bears a night and day contrast to its previous experience”. Turnover is now around £20 million.
However, it also acknowledges that the potential exists to double the size of the business with a “need to be patient and long term”. Sullivan Street, with four key investments, lacked the ability to accelerate the necessary investment.
Harwood is very different and Medica, while the only investment in print or packaging, is part of a portfolio of 12 ongoing engagements. Explaining its strategic approach, Harford says: “Our listed and unlisted target companies will typically have high quality operational management, stable revenues, good market share and strong growth potential. Yet these companies often lack access to finance, strategic expertise and restructuring opportunities.”
