Anaheim-based CleanCut Technologies LLC, an OC-homegrown packaging company that serves the medical device sector, is going global.
In January, the company was bought by Oliver Healthcare Packaging, an East Coast-based competitor, on undisclosed terms.
The deal gives CleanCut, which employs roughly 100 people at its headquarters in the Anaheim Canyon area of the city, access to additional manufacturing sites in the Netherlands and China, as well as a regional sales office in Singapore and a technology center in Ireland.
The purchase also gives Oliver the ability to expand its packaging offerings and gain entry into the West Coast, particularly Orange County, which has a number of companies in the medical device industry.
The deal “is all about growth,” said Tim Bell, CleanCut co-founder, president and head of operations.
CleanCut’s 70,000-square-foot headquarters and manufacturing facility is the first West Coast location for Oliver, which is based in Grand Rapids, Mich. Oliver has two additional manufacturing facilities in Pennsylvania and Ohio.
“Oliver and CleanCut are exclusively focused on medical packaging, an important point of differentiation in the packaging industry,” Oliver Chief Executive Mike Benevento said in a statement. “This partnership will deliver the technical expertise, customer service and speed-to-market our customers need to succeed.”
Device Packaging
There’s more to the healthcare packaging industry than meets the eye. Such packaging must provide sterility, product visibility and be impact resistant. Products using the packaging can range from drugs to medical devices like catheters.
The industry has some of the strictest regulations, given that even the slightest oversight can be problematic for users.
The medical device packaging market is estimated to be $3 billion this year, according to Steven Pepe, Oliver’s vice president of global marketing.
Trade publications have estimated CleanCut’s revenues to be in the $10 million to $50 million range, while Oliver’s revenues in 2017 were estimated by Hoovers to be $125 million.
The combined company will have nearly 1,000 people—Oliver employs about 850 globally and CleanCut has more than 100. CleanCut ranked No. 38 in the Business Journal’s 2017 ranking of best places to work, for midsized companies.
Bell said there will be no local workforce reduction and that Oliver intends “to grow the facility and make it a center of excellence.” He plans to hire additional production, manufacturing and engineering support personnel.
Bell and co-founder Howard Rowe, vice president and head of regulatory and quality assurance, will remain onboard for an 18-month integration.
Technology
CleanCut brings to Oliver a packaging product portfolio that includes patented clipless dispensers for catheters and guidewires, mounting cards, pouches, lids, cartons and shippers.
Oliver is especially excited about CleanCut’s mounting cards unit, which employ methods to safely and securely hold medical devices, Pepe said.
“We had a little mounting card business before,” Pepe said. “We are one of the largest packaging providers for the healthcare industry, [but] CleanCut is the largest [provider for] mounting cards.”
Justin Blaine, a managing director of Westlake Village-based The Mentor Group Inc. that represented CleanCut in the transaction, said the company took what is a common industry product, medical trays, and came up with a new packaging product that secures devices on a mounting card.
He said the segment “is a big business that is growing very rapidly.”
Pepe said the deal is good because the two do not need to compete any longer.
“We’ve been competing with [CleanCut] on more and more deals [over the years],” he said. Clients for the two companies include Johnson & Johnson (NYSE: JNJ), Boston Scientific Corp. (NYSE: BSX) and Stryker Corp. (NYSE: SYK).
Self-Funded
Oliver was a logical fit for CleanCut, Blaine said.
“There was a lot of interest from multiple groups across the country, including private equity, and Oliver knows the business best and how to grow CleanCut,” he said, adding that Oliver can take CleanCut products and “drop them into their existing facilities and sell them to existing clients.”
Oliver and CleanCut declined to provide the purchase price. Blaine said middle-market companies he represents typically have annual adjusted profit above $5 million. The deal took eight months to complete before closing on Jan. 24.
Bell and Rowe founded the company in 2000. Bell said the company was self-funded by himself, Rowe and a third investor.
The idea was to take the industry packaging standard, thermoformed trays, and develop them into a less bulky, improved alternative like the flexible mounting cards. The company is also the inventor of a patented, all-in-one clipless catheter packaging product, Dispenser Integrated System Kit.
“Like anything in the medical device industry, nothing goes in one speed. Any product, any packaging needs to be introduced and accepted, we went through quite extensive validation with each customer,” Bell said. “It takes time to gain momentum.”
The pair said it was the right time for the sale and Oliver can help take the company and its technologies to new markets.
Oliver plans to immediately offer CleanCut products to Europe and Asia, where it already sells other products.
