Rexam ups German glass capacity
agreement with family shareholders to acquire 100 per cent of Lüner
Glashüttenwerke, a German glass container manufacturer.
Rexam, the global consumer packaging company, has reached an agreement with family shareholders to acquire 100 per cent of Lüner Glashüttenwerke, a German glass container manufacturer.
The consideration is £33 million (€51.15m), comprising £3.5 million in cash payable for the shares and £29.5 million of estimated debt and financial liabilities assumed with the company. In addition, the company has assumed pension liabilities amounting to £1.8 million.
The transaction is subject to regulatory approval by German competition authorities.
Lüner Glas, which employs around 430 people, has two sites in Germany, one near Düsseldorf and one near Berlin. It produces flint glass containers primarily for the food market.
Rexam said that the acquisition of Lüner Glas complemented its recent £68 million acquisition of Nienburger Glas, another German glass container manufacturer, which was completed on 29 November 2002.
In a press statement, the company said that the glass "acquisitions will increase Rexam's presence in the German glass container industry to seven glassworks and provide it with a broad end use spectrum from beer and wine through carbonated soft drinks to food and pharmaceuticals".The acquisitions are expected to lead to some £6 million of synergies per year by 2004 and are anticipated to exceed Rexam's cost of capital in 2003.
Rexam proposes to partly finance the aggregate consideration of approximately £101 million for the Lüner Glas and the Nienburger Glas acquisitions through a placing by Hoare Govett of up to 21.57m new ordinary shares, representing approximately 5 per cent of Rexam's current issued ordinary share capital.
Commenting on today's announcement, Rolf Börjesson, Rexam's chief executive, said: "The acquisitions of Nienburger and Lüner are in line with our strategy to consolidate the German glass industry. We anticipate that they will help create significant cost saving synergies in this fragmented market and be earnings enhancing in 2003.
"In addition to giving us a good balance between food and beverage customer groups, they reinforce our long term commitment to relationships with key customers in Germany and across continental Europe.
"The placing gives Rexam additional financing flexibility and will enable us to fund further small acquisitions during 2003 without recourse to equity markets. We see opportunities for bolt on acquisitions primarily in the European glass industry or in the plastics markets served by Rexam."
