The MBO, fronted by sales and marketing director Neal Whipp, means that selected contracts will come under the control of the new company.

From January it will trade as Boxfoldia 2003 and from different premises in Redditch.

Boxfoldia managing director Roger Booth said: "Returns from the industry are hardly something to shout about, are they?"

Boxfoldia has around 100 staff, but Booth said that less than half would be able to transfer to the new company.

He hoped to sell the companys other assets and said an overseas packaging company had already expressed interest.

GPMU Birmingham branch secretary Tom Lowe said the union was in on-going talks with the firm.

"The meeting that weve had was positive. Well endeavour to ensure that the optimum number of people are kept in employment," said Lowe.

In the year to 31 December 2001 Boxfoldia made a profit of 204,714 on sales of 10.3m.

Story by John Davies