The 21st Shanghai International Nonwovens Exhibition(SINCE)

In a move that will increase the size and global reach of its nonwovens business, R2G Group, the owner of Czech-based Pegas Nonwovens, has reportedly struck a deal to purchase the nonwovens assets of First Quality Nonwovens. Analysts put the price tag of First Quality, which has nonwovens operations in Pennsylvania and Wuxi, China, as high as $500 million. The notoriously private nonwovens producer reportedly uses much of its output to feed its private label hygiene business, which includes baby diapers, feminine hygiene items, adult diapers, wipes and pet care products.

Not much is known about First Quality’s nonwovens operations but most experts agree that the company makes about 100,000 tons of spunbond and spunmelt nonwovens on eight lines at two plants in Pennsylvania. It also operates at least one line Wuxi, China, which came onstream in 2013. It is believed the First Quality also has spunlace assets in Pennsylvania.

According to reports, R2G, a Czech-based private equity fund started in 2016, is eyeing First Quality to expand its profile among its global customers in the disposable hygiene market. Pegas currently operates nine lines at two plants in the Czech Republic, where it has a 10th line under construction, and has one-line operations in South Africa and Egypt. The majority of its sales are conducted within continental Europe and the company has made global expansion a top priority. R2G purchased the company in September 2017.

“We believe strongly in the nonwovens business,” says Michae Smrek, CEO Of R2G. “This transaction will enable us and our group companies to support our global customers across four continents. Post transaction, we will have state-of-the-art production facilities and unrivalled know-how and R&D expertise to ensure that our customers benefit from the premium products we offer and the joint innovation and synergies that this combination will bring. When we acquired Pegas, we said that this was the first step to building a global platform. This transaction is the second step and we look forward to now investing into our global platform and the people that have made the production companies a success.”

Combining Pegas and First Quality Nonwovens will produce one of the world’s largest suppliers of spunbond and spunmelt nonwovens with lines on four continents. When its upcoming investments in Czech Republic and South America are complete, Pegas will have an annual capacity of 131,000 tons while First Qualiyt can make 97,000 tons in the U.S. as well as 24,000 tons in China. Together the two companies’ annual sales will be in the $550-600 million region. Both companies are major suppliers to the global hygiene industry.

The transaction is expected to be complete in the third quarter.

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