Ardagh takes over Rexam's glass business

By Ahmed ElAmin

- Last updated on GMT

Related tags Rexam Plastic

Rexam has completed its divestment of its European glass packaging
business and is now preparing for its takeover of Owens-Illinois'
plastics division.

The company announced on Friday the completion of the sale of the glass business to Ardagh, which was initially announced in March 2007. Ardagh Glass bought Rexam's glass container business for €660m. The purchase allows Ardagh to double in size to become Europe's third largest glass container supplier. The deal will reduce competition in the glass container market, giving Ardagh 18 per cent of the European market and more power over pricing. Rexam, the world's leading beverage can maker, is in the process of reorganising itself to focus on what it sees as high-growth packaging segments. "The divestment is part of Rexam's strategy to move into higher growth, higher margin businesses and these proceeds will be used to partially fund the recently announced proposed acquisition of O-I Plastics, a leading US manufacturer of rigid plastic healthcare packaging and plastic closure systems,"​ the company said. Ardagh will gain 13 manufacturing plants once the transaction is completed. The Rexam unit has one plant each in Sweden and Denmark, two in Poland, seven in Germany and two in the Netherlands. The plants output about 7bn glass containers a year, supplying the beverage, food, and pharma markets. The unit reported sales of €642m, sales of €116m and operating profit of £40m (€59m) in 2006. Rexam Glass had net operating assets of £372m (€548m), including goodwill, as at 31 December 2006. Ardagh currently operates nine glass plants in Germany, Italy, Poland and the UK and employs 3,300 people. Post acquisition, the enlarged Ardagh group will have annual sales of about €1.25bn and will operate twenty two glass plants in seven countries, said Paul Coulson, Ardagh's chairman. In 2005 Ardagh Glass bought out Rexam's UK glass business. Ardagh, which demerged from South Wharf in 2003 after closing its manufacturing operations, is controlled by investor Paul Coulson. This month Rexam announced it would buy the plastics plastics division of Owens-Illinois for US$1,565m (€1,170m) in cash. The move by both packaging giants marks part of an ongoing reorganisation in the market. Companies are either moving to focus on profitable areas of the market, or, as in the case of Rexam, try to offer a range of packaging formats and materials to their customers. O-I Plastics, the division being purchased by Rexam, specialises in healthcare packaging and plastic tops. O-I Plastics is a US manufacturer of rigid plastic healthcare packaging and plastic closure systems. The unit had sales of US$760m in 2006 and an underlying profit of US$114m. Rexam's clients include Anheuser-Busch, Cadbury-Schweppes, Carlsberg, Coca-Cola, Heineken, InBev, Pepsi, Proctor & Gamble, Red Bull and SABMiller.

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