About Medica Packaging

Medica Packaging is a supplier of paper based cartons and leaflets to the healthcare and pharmaceutical sectors. It operates in a highly regulated market selling to large pharmaceutical companies.

Before its acquisition by Sullivan Street, Medica was a single site medical packaging division of the food-focused Benson Group. Shortly after Benson was acquired by US conglomerate Graphic Packaging, Medica was deemed non-core given its loss-making operations and misaligned market vertical and put up for sale.

Sullivan Street helped Medica Packaging:

• Establish central functions as a standalone business andrecruit a top tier management team
• Significantly improve operations, profit margins and revenue growth
• Develop a market-leading 5-day lead time proposition and pure play healthcare focus
• Implement a high ROI capex programme into underinvested asset base to expand capacity, capability and productivity.

The Opportunity

Medica was a single site healthcare packaging division of the food-focused Benson Group. Shortly after Benson was acquired by US conglomerate Graphic Packaging, Medica was deemed non-core given its loss-making operations and misaligned market vertical and put up for sale. Medica had been neglected as part of the Benson Group, with its site in Crewe often being used as an overflow facility for the food packaging business. At sale it was losing over £1m of EBITDA and necessitated a complex carve-out Although this deterred others, we were able to produce bottom-up analysis of the customer product lines through direct customer engagement and benchmarking to equivalent plants across Europe, sourcing difficult to find comparable data. By combining this with our understanding of the generic stickiness of the customer and specific promises elicited from customers, we considered the risk of the unknown revenue line, as well as the risk of a customer exodus following the removal of the parent, to be mitigatable. These mitigations, crucially alongside with providing an initially strong balance sheet, meant Sullivan Street could accept the risks in exchange for an attractive entry price.

The Investment

Over the life of Sullivan Street’s ownership, the business underwent a comprehensive turnaround strategy that significantly improved sales and profitability. Initial operational improvement which resulted in higher productivity, reduced waste costs and the removal of non-core and unprofitable work, transformed the Business into a uniquely pure play healthcare packaging supplier. With this positioning wholesale management changes were made to focus on top-line growth. This alongside significant investment in the fixed asset base was successfully achieved through a differentiated offering providing significantly faster production lead times versus the industry standard. This six-year ownership saw the business transformed from a heavily loss making, non-core subsidiary of a large corporate into a market leading, pure-play healthcare packaging supplier. Sullivan Street exited its investment in December 2020 to UK based private equity fund Harwood Private Equity.