Two major deals recently took place that demonstrate who the two mega recyclers are as industry mergers and acquisition (M&A) activity heats up.
First, 48forty Solutions (48forty), the nation’s largest pallet recycler, shocked the industry by acquiring Prime360 shortly after its acquisition of Relogistics in April. Not to be outdone, Kamps Inc. has bolstered its national expertise, facility footprint, core supply and customer base by acquiring Buckeye Diamond Logistics (BDL) and its subsidiaries including BDL Supply, PALNET USA and H&S Forest Products.
Both 48forty Solutions and Kamps Inc. are aggressive in growing through strategic acquisitions. Backed by private equity funds, both companies have the resources to gobble up whatever they want. A number of recyclers are concerned about the rate of consolidation and the ability of these mega companies to control core supplies in some key markets.
But others suggested the acquisitions don’t mean much in terms of industry opportunity. Under the old IFCO Systems, you had the nation’s largest pallet manufacturer and recycler under one roof. And there was still plenty of room for growth for a lot of small- to mid-sized companies.
Mike Hachtman, the CEO of 48forty, agreed, “It’s a giant industry. We will continue to grow both through acquisitions and organically. It is a giant industry served by thousands of pallet companies. We compete with them every day. I don’t see a future where we don’t compete with them every day. Competition is good for our customers and the industry.”
Hachtman added, “The white-wood business creates opportunities for small and large businesses. We work with many small- and medium-sized companies on a regular basis, and they will continue to be an important part of our network.”
Given its combined size, 48forty will definitely wield significant influence in the used GMA pallet market. When asked about the total size of its pallet flows, Hachtman said, “If you combine all the pallets that we manage through our networks from all three companies, you are approaching 300 million total pallets. But the actual number of cores is far less because of odd-sized, junk material, pallets returned to customers, etc.”
This acquisition of Prime360 combines the largest recycler, one of the largest if not the biggest broker in the country, and a leading TPM provider to Wal-Mart, Target, and other retailers all under one company.
Kamps bought BDL which provides pallet recycling, national pallet sales and on-site pallet management services to over 1,500 customers nationwide. With over 10 asset-based locations, 20 on-site locations and 150 partner locations nationwide, BDL now manages and recycles over 100 million pallets annually. The combined companies employ over 1,100 full-time employees and operates over 1,000 trailers. All assets and employees plan to remain with the company post-closing, including the BDL senior leadership team led by president and CEO Sam McAdow Jr.
Recent strategies of the two major players are somewhat different. For starters, 48forty Solutions began with a larger footprint of physical recycling facilities, but Kamps is catching up quickly by focusing on buying brick-and-mortar companies. Mitchell Kamps, president of Kamps Inc., commented, “We prefer recycling plants and recycling operations because we are then in control of the entire process.”
48forty primarily has added brokerage and total pallet management (TPM) companies with limited recycling infrastructure. What Relogistics and Prime360 brought to 48forty is core supply. And that’s a big deal for anyone in the recycling business.
Explaining why his family decided to sell now, Sam McAdow Jr., president and CEO of BDL, said, “In the current market, one of the best ways to grow is through acquisition or to join somebody who is bigger. Given some uncertainty in our succession plans, we decided to sell to another larger player who could help us grow while taking care of both our employees and customers. I believe we have chosen a strong partner in Kamps.”
BDL services customers through four well-recognized industry brands: BDL Supply, PALNET, H&S Forest Products and EasyHeat Wood Pellets – specializing in pallet recycling, national pallet sales, and on-site pallet management. These companies are anticipated to be consolidated under the Kamps brand over time.
After recent acquisitions, Kamps now has a strong presence of asset-based plants in the Midwest, South, Pennsylvania and Texas. The company does a significant amount of business on both the West and East Coast through its pallet partner network.
Many pallet industry players are wondering when the consolidation trend will slow down. But for now, it seems to be full speed ahead with 48forty and Kamps leading the pack.
