Target Company Overview

Excelis Packaging Automation, formerly known as SureKap LLC, is a leading provider of comprehensive packaging automation solutions based in Winder, GA. The rebranding reflects the company's growth and expanded capabilities in delivering turnkey automation solutions through North American-made packaging equipment, parts, and services. Since its acquisition by LFM Capital in December 2021, Excelis has transformed from a specialist in automated capping equipment into a full-service packaging automation platform by integrating four value-added acquisitions.

The recent acquisition of Kraken Automation Inc. significantly enhances Excelis’s capabilities. Founded in 1987 and located in Ontario, Canada, Kraken specializes in high-speed material handling and customized automation solutions, including conveyance, case packing, cartoning, and accumulation systems. With over 35 years of experience, Kraken is recognized for its commitment to optimizing manufacturing processes and enhancing productivity through innovative automated packaging solutions.

Industry Overview

The packaging automation industry is experiencing robust growth, driven by the increasing demand for efficient manufacturing processes and the need to reduce operational costs. In North America, particularly the U.S. and Canada, companies are increasingly investing in automation technology to streamline production and improve product reliability. This trend is further fueled by the rise of e-commerce, which necessitates faster and more efficient packaging and distribution solutions.

In Canada, the packaging industry is vibrant, characterized by a diverse range of sectors including food and beverage, pharmaceuticals, and consumer goods. The strong presence of both domestic and international players enhances the competitive landscape, giving rise to continuous innovation. Recent technological advancements, such as robotics and IoT, are increasingly being adopted in packaging processes, allowing companies to respond effectively to market demands.

Furthermore, the shift towards sustainability in packaging solutions is gaining traction in Canada, as consumers and regulatory bodies alike demand more environmentally friendly practices. Companies are adapting by integrating sustainable materials and practices into their operations, leading to increased investments in research and development for new packaging technologies.

As a result, organizations like Excelis Packaging Automation are strategically positioning themselves in this evolving market by enhancing their service offerings and capabilities through acquisitions like Kraken Automation, which align well with current industry trends.

Rationale Behind the Deal

The main objective behind Excelis's acquisition of Kraken Automation is to strengthen its position in the packaging automation market by enhancing its technology and service capabilities. The integration of Kraken's innovative solutions will enable Excelis to offer a more comprehensive suite of products and services to its clients, particularly in the secondary packaging space.

This acquisition also reflects LFM Capital's strategy to build a robust and diversified portfolio within the packaging machinery sector. By combining the strengths of Excelis and Kraken, the firms aim to leverage synergies that drive value for customers while fostering continued growth and innovation.

Investor Information

LFM Capital is a Nashville, Tennessee-based private equity firm specializing in the lower middle market, focusing on manufacturing and industrial services companies. Led by a team of seasoned professionals with extensive experience in global executive management and private equity, LFM Capital seeks to partner with portfolio management teams to create world-class operations through strategic growth and operational excellence.

The firm targets companies with at least $3 million in EBITDA and enterprise values ranging from $15 million to $125 million. LFM is known for its hands-on approach, working closely with portfolio companies to optimize operations and develop targeted growth strategies, making it a valuable partner for businesses like Excelis.

View of Dealert

The acquisition of Kraken Automation by Excelis Packaging Automation is viewed positively, as it not only enhances Excelis's product offerings but also positions the company as a more comprehensive service provider in the packaging automation market. Kraken's expertise in high-speed material handling and custom automation aligns seamlessly with Excelis's strategic goals, allowing for more streamlined manufacturing processes.

Additionally, this deal reflects a larger trend within the industry where companies are consolidating resources to better meet the shifting demands of the market. With technological advancements and the need for operational efficiency driving changes in manufacturing, Excelis is well-equipped to take advantage of these trends through Kraken's innovative solutions.

The synergies that will emerge from this acquisition could lead to substantial cost savings and improved service delivery, making it a potentially lucrative investment. Both companies' commitment to enhancing manufacturing efficiency creates a strong foundation for future growth, benefiting their combined customer base.

Overall, the partnership is expected to further solidify Excelis Packaging Automation's position in the market, suggesting that this investment will be not only beneficial but essential to its growth trajectory.

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