Materials Firm Looks to Medtech for Growth

Industrial materials firm Scapa Group PLC is turning to the medical device sector to secure its long-term growth. The company recently bought Knoxville, Tenn.-based WEBTEC Converting LLC, a 14-year-old contract manufacturer that describes itself as a full-service converter, printer and packager of medical devices. Scapa paid $30 million cash (19.1 million British pounds) for the firm and is willing to spend another $15 million (9.5 million British pounds), depending on WEBTEC’s financial performance over the next two years.

WEBTEC makes adhesive-backed medical devices, including woundcare dressings as well as packaging and labels for medical products. It also converts materials such as silicone, foam, film, foil and hydrogel into products sold in the healthcare and electronics industries. In 2010, the company posted an operating profit of $3.6 million and $27 million in revenue; executives expect last year’s revenue to rise slightly to $29 million.

Scapa and WEBTEC bigwigs believe the acquisition will be mutually beneficial to both companies, helping WEBTEC strengthen its market position in the adhesive-backed medical device contract manufacturing sector, and enabling Manchester, United Kingdom-based Scapa to enhance its technology and service offerings to medical customers.

“WEBTEC has invested many years into its core management and production team, developing converting expertise, packaging capabilities and high quality systems,” noted CEO Randy Holmes said. “Integrated with Scapa’s materials expertise and coating technologies, these create a market leader in contract manufacturing of adhesive-backed medical devices.”

Scapa’s chief executive, in turn, complimented WEBTEC’s management and said the company would enable his own firm to offer customers advanced woundcare solutions. “WEBTEC significantly expands and gives critical mass to our medical business. Its blue-chip customer base and strong management team are an excellent fit with our group and will enable us to offer turnkey solutions in advanced woundcare and consumer medical segments,” he said in a news release announcing the purchase. “I am confident this acquisition will allow us to continue the strong progress we have made in the last 18 months.”

That progress included the creation of wholly-owned subsidiaries in Brazil and India, the unveiling of a new compressible sleeves tape range, and partnering with Dow Corning to expand adhesive solutions for medical applications.

Scapa’s acquisition of WEBTEC was secured with a $31.1 million (20 million British pounds) funding package from Lloyds Bank Corporate Markets and Yorkshire Bank Corporate and Structured Finance in Manchester.