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Rexam acquires O-I plastics operation

July 3, 2007 Comments Off Print Print

Rexam hopes to position itself as the leading manufacturer of rigid plastic packaging for the US healthcare industry following its acquisition of Owens-Illinois plastics business

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The global consumer packaging group has been involved in pharmaceutical packaging for more than a decade and this deal, announced in June, will increase its competitiveness against major rivals such as Nypro, Rieke and Alcan.

Rexam is paying £930m ($1.86bn) in cash for the Owens-Illinois business.

Tim Rothwell, packaging analyst at Lansdowne Capital, said: “It’s a very good deal for Rexam and it has made them a major international player in that market.”

The company plans to partially fund the acquisition with the proceeds from the sale of its glass business to Ardagh Glass, which was completed in June.

Rexam said the glass divestment was part of its strategy to move into “higher-growth, higher-margin businesses”.

The £450m sale to Ardagh, revealed in March, comes two years after Rexam sold its UK glass operation to the same buyer.

Rexam is also continuing to extend its core operations in emerging markets and has invested £12m in a new beverage can plant in Guatemala.

The joint venture with Mexican packaging group Envases Universales includes a geenfield plant, which was completed in December 2006 and is able to produce around one billion cans a year.

The Central American beverage can market is growing at 6% a year. Rexam already has a beverage can plant in Mexico.

Rexam chief executive Leslie Van de Walle said: “This is a very attractive growth opportunity. It gives us a firmer foothold in this growing market.”


OWENS-ILLINOIS FACTS
• The Owens-Illinois plastics business comprises 19 manufacturing plants, 14 of which are located in the US and Puerto Rico
• In 2006, Owens-Illinois’ rigid plastics business generated sales of £384m (US$760m) and an underlying profit of £57.7m (US$114m)
• Approximately 50% of Owens-Illinois’ plastic sales are in the healthcare packaging market

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