Lincolnshire Management Expands Investment in Horticultural Containers Market

Desch PlantPak announced their second acquisition of an injection molded container manufacturer on September 15th, signing a letter of intent to join forces with Interplast Plastics Products. Desch Plantpak, a portfolio company of Lincolnshire Management, is a leading player in the $900 MM European horticultural containers market. This acquisition will reinforce their position as a leading producer of thermoformed and injection molded products for the horticultural industry, expand their product assortment in the injection molding category, and increase their access to the Eastern European market.

A Long Standing Relationship

The two companies are hardly strangers to each other. The founder of Interplast Plastics Products, Henk Aufderhaar, started producing horticultural pots in 1979 using equipment which he purchased from EPLA, one of Desch Plantpak’s prior acquisitions. The two businesses have long shared a similar vision of delivering innovations in recycled container packaging for nursery and plant growing customers. This merger is an evolution of this partnership and positions the two teams for a bright future together.

“I just turned 71, so the continuity for my people is most important, and with Desch we have found that.” commented Henk, “The companies have already been collaborating for many years, so that helped a lot.”

Building a Growth Platform

This acquisition expands Desch Plantpak’s footprint from four to six factories, adding locations in Holland and Poland. The combined businesses generated almost $95 MM in sales during 2019 and employ over 300 people. From a manufacturing perspective, this expands Desch’s available capacity to over 70 injection molding machines between their UK, Netherlands, and Polish locations.

Desch Plantpak brings a strong portfolio of capabilities into the relationship, developed across a 55 year history starting with their first factory in the UK. Their materials lineup includes polypropylene, polystyrene, polyester, and biopolymers. Desch’s historical specialty is greenhouse and nursery supplies. This includes pots, containers, transport trays, seedling trays, transplant trays, and bedding packs. Their earlier acquisition of EPLA’s injection molding business added capabilities in consumer-focused decorative pots, hanging pots, and accessories. The Interplast acquisition expands their assortment of products and increases their injection molding capacity.

There’s opportunity on the commercial side as well. Injection molded containers are one of the largest and fastest growing segments in the $900 MM European horticultural container market, representing two thirds of sales. This acquisition expands Desch’s product assortment in the injection molding space. Given that the two companies serve similar markets, there’s substantial opportunity to cross-sell each legacy company’s products to the combined customer list.

Jan Willem Wieringa, managing director of Desch, shared his perspective on the deal. “We have been looking for a while to expand our injection molding capacity and IPP is a great fit with a lot of complementary products and extra capacity”.

The two companies share a common purpose and values. Desch was an early mover in using recycled and bio-polymer materials to create container packaging for the greenhouse industry. They pride themselves as a leader in efficient, sustainable manufacturing. Interplast Plastic Products has also used recycled materials for decades and shares a similar dedication to process and product improvement.

Supported by Strong Sponsors

Desch’s owner, Lincolnshire Management is a middle market private equity firm based in New York City. They’ve been involved in the industry since 2005, with the acquisition of two American companies in a similar space (Nursery Supplies Inc, Summit Plastics). Their American business unit shares a similar focus on developing sustainable and environmentally friendly solutions for plant packaging for the greenhouse and nursery markets. They were an early mover in the recycled and environmentally sustainable space, shifting their production in 2008 to nearly exclusive use of recycled materials.

Lincolnshire Management has been investing in high potential middle market companies for over thirty years, completing over 90 business acquisitions. They operate as a value investor in this space, with deep expertise in deal sourcing and operational improvement.

Pieter Kodde, a Managing Director at Lincolnshire pointed to the Company as a “strategic addition to the Desch operating platform, and we are very excited about the potential of the combined business. We look forward to working with the management teams of both companies to drive sustained growth in the coming years.”

Aligned with Strong Trends

The combined companies sit at the intersection of several powerful trends. Injection molded packaging has been a fast growing segment of the horticultural container market. This acquisition increases Desch’s exposure to this space, which bodes well for future growth. Their joint dedication to using recycled and sustainable materials helps growers meet the expectations of nursery buyers and consumer end users. Sustainability is a hot topic in packaging circles and Desch is well ahead of the game in this department.

Judging from the announced results of their US sister company, there’s cause to be optimistic about the prospects for the business during the coronavirus pandemic. Deprived of the ability to safely attend a sporting event or even an evening at the local pub, many US consumers have opted to invest their time and discretionary income in sprucing up their home and garden. Given the shift towards remote work and telecommuting, families are spending more time in their homes and backyard. This is bullish for Desch and NSI’s customers, the growers, who have increased their purchases in recent months. The CEO of Nursery Supplies, Inc reported that the company was on track to deliver a 7% lift in sales this year, an outstanding result for what is essentially a packaging business.

While Desch hasn’t shared any updates on their recent growth, there is ample cause for optimism. Between the strong results at their American business and the expansion of their European operations, it appears that Lincolnshire Management’s strategy in the horticultural container packaging space is well on its way to bearing fruit. This recent acquisition expands their European manufacturing capacity and commercial prospects through building a closer relationship with their long time industry colleagues and partners at Interplast Plastics Products. It will be interesting to see how this business develops.