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O-I to shed plastics packaging division
Owens-Illinois could be poised to sell its plastics packaging business.
In a statement at the beginning of January, the company said it was retaining Goldman Sachs as an advisor as it considered the future options for O-I Plastics, which comprises the healthcare packaging and closure and speciality products divisions.
Analyst Tim Rothwell, packaging specialist at Lansdowne Capital, said: “What this announcement is indicating, if you read between the lines, is that the whole plastics department is up for sale.”
Owens-Illinois has plastic packaging manufacturing plants in the US, Mexico, Brazil, Hungary and Singapore. They produce packaging for the pharmaceutical, healthcare, food and beverage, household, chemical and personal care industries. Analysts predict that a sale could raise up to £750m ($1.5bn) for the group.
Owens-Illinois suffered a 71% drop in profits in the quarter ending 30 September 2006 compared with the same period in 2005.
Chief executive Steve McCracken left the company last year and was replaced by Albert Stroucken (pictured).
Since his appointment, Stroucken has evaluated the business and re-focused the company on its core market, glass production.
Since his appointment, Stroucken has evaluated the business and re-focused the company on its core market, glass production.
This process was started under McCracken in 2004 with the sale of the blow-moulded plastics arm of the business to US company Graham Packaging.
“Our plastics business is a very attractive franchise,” said Stroucken. “We are conducting this review to explore ways of maximising value for our shareholders.”
Owens-Illinois’s share price has been on the rise since last August and continued to increase following the sale announcement.
Stroucken: focus on glass
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