The planned merger of Prime Tanning Co. in the state of Maine with Shanghai Richina Leather (SRL) will create the world’s largest supplier of bovine fashion leathers for the footwear and specialty markets. It will also strengthen the U.S. company’s capacity in the areas of lambskin garment leather and in automotive leathers.
Adding the production capacity of the Chinese firm, the company that will come out of the merger will have the capacity to finish more than 150 million square feet of finished leather annually. Prior to the merger, Prime has a capacity of 55 million square feet of finished leather plus the production of about 125 million square feet of wetblue leather. SRL was a major customer of Prime’s wetblue.
Robert Moore, chief executive of Prime, will act as CEO of the new merged company, which will be called Prime Leather International and will seek a listing on an Asian stock exchange. Even before the actual merger, whose details have yet to be ironed out, the two companies will combine their global management, sales, marketing and customer service teams under a management agreement due to be struck on May 1. Other operations will be integrated in a second stage.
Prime has been in a strong acquisitive mood lately. In August 2007 it announced the takeover of another U.S. tannery in the state of Maine, Irving Tanning. A few months later, in November, it was the turn of a competitor in Wisconsin, Cudahy Tanning Co., whose facility will be closed in May. According to a local report published before the latest move, Prime was expecting 2008 revenues of more than $250 million. Company officials declined to project the annual turnover of the company after the planned merger with SRL. They also would not disclose the shareholdings of the various stakeholders.