by Heather B. Hayes
It’s not easy to penetrate a new market, especially when potential customers are located overseas and are served by well-established competitors.
That competitive situation was one of the reasons that the 112-year-old Hornschuch Group decided to buy 114-year-old O’Sullivan Films, of Winchester, in a deal finalized last March. Hornschuch, a German company, makes plastics, foils and artificial leathers used in a number of industries, including autos and home décor. On this side of the Atlantic, O’Sullivan Films manufactures polymer plastics for the automotive, health-care and home consumer markets.
Now Hornschuch is investing $28.3 million in O’Sullivan in an expansion that will create 174 jobs, raising total employment at the Winchester company to nearly 550. The expansion will enable O’Sullivan to make Hornschuch-developed products.
“North America is really an untapped market for them,” says Dennis Bromley, a member of the O’Sullivan Films management team. “They wanted to be able to sell their products here, and expanding the capabilities at our facility is the way for them to do that.”
The two companies have a lot in common, says Jeffrey G. Moore, managing director and principal at Richmond-based Matrix Capital Markets Group Inc., which worked on the O’Sullivan acquisition. They have similar market focuses, cultures and strategic visions, he says. These synergies are one reason why O’Sullivan chose to sell to Hornschuch rather than to another suitor based in Asia, which had offered a higher price.
O’Sullivan and Hornschuch products also had enough similarities to permit cross-selling in each other’s markets, says Moore.
O’Sullivan, for example, produces plastic windows used in convertibles made by major U.S. automakers. Hornschuch, on the other hand, sells the artificial leather used in door interiors, instrument panels and gear shafts in cars made by Mercedes-Benz, Audi, BMW and other European auto companies.
“Our sales force will now be able to go to an established client in the automotive industry here in North America and offer them a pallet of products that we couldn’t have just six months ago,” Bromley explains. “And then they will also be able to take our products and, in reverse, leverage their existing sales force to penetrate the European market.”
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