The company says that, if approved, the acquisition will transform the scale of its Plastic Packaging operations and “position Rexam as one of the global leaders in the growth areas of rigid plastic healthcare and closures”. The deal will also “offer significant value creation opportunities through cost and other synergies”. Completion, expected in the third quarter of this year, is conditional on several conditions, including shareholder approval at a June 28 EGM and anti-trust clearance.
Rexam says the recent sale of its “relatively low growth and capital-intensive” Glass business, and the reinvestment of the proceeds to acquire O-I Plastics, a “higher growth, cash-generative business”, are consistent with its strategy of “growing organically, building positions in growth markets and product segments through disciplined acquisitions, strengthening relationships with customers and suppliers, and accelerating the rate of innovation to enhance its existing customer offering”. The scale of its enlarged Plastic Packaging operation will, it says, provide the critical mass required to be an “effective global player in rigid plastic packaging” while enabling performance improvement through technology and best practice sharing, and providing enhanced r&d and innovation capabilities.
Rexam already has extensive healthcare packaging operations through its Pharma division in Europe, the US and India, and in closures through its Closures and Containers division in America. “The acquisition is an excellent strategic fit in terms of customers, end use applications and geography,” says the company, which claims the deal will establish it as the US's leading rigid plastic healthcare packaging manufacturer in a market currently worth an estimated US$4bn (€2bn) and growing annually at a rate of 7%. It will also, Rexam claims, position it as the country's leading plastic closure manufacturer, while generating an anticipated US$40m (€30.1m) in annual synergies.
Headquartered in Perrysburg, Ohio, O-I Plastics operates 19 manufacturing plants (including one currently being built in Malaysia), 14 in the US and Puerto Rico, and the others in Brazil, Mexico, Hungary and Singapore. lt has two linked “major business units” - Healthcare Packaging, which accounts for 50% of sales, and Closures. Presently 92% of the overall business's sales are in the US.
If the acquisition goes ahead, the enlarged Group will continue to be managed by the current executive directors, with no changes anticipated to the Board. Integration of O-I Plastics into Rexam's Plastic Packaging business will be overseen by Rexam group director of Plastic Packaging Graham Chipchase, the plan being for the O-I Healthcare Packaging and Closures businesses to be merged with Rexam's current Pharma and Closures & Containers divisions respectively.
Graham Chipchase will oversee the planned integration of O-I Plastics into Rexam's existing Plastic Packaging Packaging business ChipchaseG11
