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SILGAN ACQUIRES ALBÉA’S DISPENSING BUSINESS FOR $900 MILLION

Published January 31, 2020
Published January 31, 2020
Copal via Unsplash

Silgan Holdings Inc. has announced that it has signed a binding offer to acquire Albéa’s dispensing business for $900 million. This includes the global supplier’s pumps, sprayers, and foam dispensing solutions to major branded consumer goods product companies in the beauty and personal care markets.

WHO: Albéa has leadership positions in plastic & laminate tubes, mascaras, lipsticks, samplers and foam pumps, and recognized expertise in fragrance and skincare dispensing pumps, fragrance & lotion caps, compacts, lip gloss, promotional items, and accessories. Albéa operates a global network of 10 plants across North America, Europe, South America, and Asia.

Silgan Holdings, a Connecticut-based American manufacturing company, is a leading supplier of rigid packaging for consumer goods products. The company was founded in 1987 by two former executives of Continental Can, Phil Silver and Greg Horrigan.

WHY: This transaction would leverage the two group’s complementary business strategies and markets, with Silgan Closures’ segment focused on food, beverage, home care, and personal care, and Albéa Dispensing Systems focused on beauty and skincare. It would also allow Albéa to focus its resources and strategic ambitions on its Tubes, Cosmetic Rigid Packaging, and Beauty Solutions businesses and leadership positions.

IN THEIR OWN WORDS: “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 Albéa 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.

DETAILS:

  • Silgan Holdings will acquire Albéa’s dispensing business for $900 million.
  • 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.
  • According to Albéa, for the fiscal year ended 2018, this part of their business generated sales of approximately $383 million.
  • Albéa was acquired by an affiliate of Sun European Partners in 2010 and sold to funds advised by investment company PAI Partners in 2018.
  • 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.
  • 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.
  • 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.
  • 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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