Onex Corp. (TSX:OCX) plans to speed up acquisitions by SGS International, the graphics design and packaging services company the private equity investment firm bought earlier this year, chief executive Gerald Schwartz said Wednesday.
Schwartz said that the graphics services industry is highly fragmented and ripe for consolidation.
“Working with management, we are already working on and in fact have completed one acquisition which will extend the company’s services to point-of-purchase displays and in-store banners for retail customers,” he said.
Onex reported a profit attributable to shareholders of US$175 million or $1.52 per share for the quarter ended Sept. 30, compared with $146 million or $1.25 per share a year ago.
Revenue grew to $6.71 billion, up from $6.01 billion.
Onex attributed the increase in part to acquisitions in 2011, including the Jeld-Wen window business.
During the quarter, Onex closed its $813-million acquisition of SGS International, which provides graphics design and packaging services to the consumer products industry. Onex Partners III invested $260 million, of which Onex’s share was $66 million as a limited partner.
Schwartz said the business has strong management and growing market share.
“Under our ownership we intend to accelerate SGS’s acquisition strategy,” he said.
Onex also recently agreed to buy KraussMaffei, a manufacturer of plastic and rubber processing equipment, in a deal valued at euro568 million.
Onex Partners III is expected to make an equity investment of approximately $340 million, of which Onex’s share is $86 million.
Schwartz called KraussMaffei a global business with a strong franchise and opportunities to improve performance.
“We are already at work with the management team to identify and go after these very opportunities. We expect to close this purchase by the end of March of 2013,” he said.
The recent investments come amid volatile equity markets and an uncertain outlook for the global economy.
Onex, which has roughly $1.5 billion in cash and other short-term investments as well as $2.2 billion in uncalled committed third-party capital, noted that “while the private equity origination market has improved this year, it is still very competitive.”
The company manages about $14 billion including roughly $9.6 billion in third-party capital.
Onex holds investments in a wide range of companies including a large stake in electronics maker Celestica Inc. (TSX:CLS).
Shares in the company, which reported its results after the close of markets, were down 29 cents at $40.40 on the Toronto Stock Exchange.