Silgan Holdings Inc. a leading supplier of rigid packaging for consumer goods products, has announced that it has signed a binding offer to acquire Albea’s dispensing business for $900 million. This business is a leading global supplier of highly engineered pumps, sprayers and foam dispensing solutions to major branded consumer goods product companies in the Beauty and Personal Care markets. It operates a global network of 10 plants across North America, Europe, South America and Asia. For the fiscal year ended 2018, this business generated sales of approximately $383 million.
“We believe this business, like Silgan, holds similar passions for excellence in customer support, quality, safety and competitive franchise positions, while maintaining a strong focus on returns and free cash flow”
Proposed Acquisition Further Broadens Closures Franchise
The proposed acquisition is expected to close in the first half of 2020 and is subject to the receipt of applicable regulatory approvals and the satisfaction of certain customary conditions. Upon completion of the required works councils consultations, Silgan expects that Albea and certain of its subsidiaries will enter into a definitive purchase agreement with Silgan and certain of its subsidiaries for the purchase and sale of the business.
“This proposed acquisition would significantly enhance the scope and breadth of our market leading closures franchise by bringing new products and capabilities in the highly engineered dispensing category, such as fine lotion dispensing solutions for skin care,” said Tony Allott, Chairman and CEO.
“The Albea dispensing business is a ‘hand-in-glove’ fit with our closures business. Like Silgan, this business has a long history as a differentiated packaging franchise with deep customer relationships and a strong track record of product innovation to meet customer needs. This proposed acquisition would allow us to expand relationships and product offerings with global customers, bring new customer relationships and provide cost synergy opportunities of $20 million. It would also create an incremental platform for growth and strongly enhance our free cash flow,” continued Mr. Allott.
“We believe this business, like Silgan, holds similar passions for excellence in customer support, quality, safety and competitive franchise positions, while maintaining a strong focus on returns and free cash flow,” concluded Mr. Allott.
The purchase price for this proposed acquisition would be subject to customary adjustments to be outlined in the purchase agreement. Silgan expects to fund the purchase price for this proposed acquisition with a combination of cash on hand and borrowings under the Company’s senior secured credit facility, including a committed incremental delayed draw term loan.
Market Focus: Following the proposed acquisition, Silgan would expand its position in the dispensing markets to include highly engineered foam pumps, fine mist pumps, lotion pumps, samplers and fragrance caps and closures for personal care and beauty products.
Synergies: Silgan expects to realize operational cost synergies of $20 million, on an annual run rate basis, within 18 months following the proposed acquisition. These synergies would be achieved primarily through reductions in general and administrative expenses, procurement savings and manufacturing efficiencies.
Financial Impact: Silgan expects this proposed acquisition to be accretive to earnings and free cash flow per share in 2020, excluding the impact of purchase accounting adjustments.
Financing: Pro forma for this proposed acquisition, Silgan’s net leverage ratio under its senior secured credit facility would be approximately 4.0 times, which is consistent with past levels following acquisitions. Silgan expects to finance this proposed transaction with debt at an attractive cost.
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- Jo Webb
- Company News
- Created 28 Jan 2020
- Modified 28 Jan 2020
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