Rexam to buy Russian beverage can maker

By Ahmed ElAmin

- Last updated on GMT

Related tags Rexam Chief executive officer Russia

As part of its bid to expand operations into emerging markets Rexam
today said it has agreed to buy a Russian beverage can maker for
US$297m (€218m).

Rexam, like other packaging companies, have been following their customers as they seek profits in the growing markets of eastern Europe Rexam, the world's leading beverage can maker, will acquire Rostar from En+ Group, the Russian aluminium conglomerate. The acquisition, which requires regulatory approvals, is expected to be completed during the fourth quarter of 2007. Rostar has two manufacturing facilities. One is near Moscow and the other is located near St Petersburg. The Moscow plant, which includes an end making facility, has an annual capacity of about 1.3bn beverage cans, while the St Petersburg one has a capacity of 1.7bn beverage cans. In 2006, Rostar had sales of US$214m. As Rostar was part of Rusal, it did not hedge its aluminium exposure and, in common with the rest of the European beverage can industry, its 2006 profits were adversely impacted by price rises, Rexam noted. Rexam expects the unit's profits to improve in 2007. As at 31 December 2006 Rostar had net operating assets of US$181m. Leslie Van de Walle, Rexam's chief executive officer said the acquisition is part of the company's strategy to expand into emerging markets. "We have been in Russia for over 10 years, and the acquisition, along with our new greenfield plant in Argayash and the investment in new lines at our existing plant, positions us well in this growth market,"​ he said. Last month Rexam completed its divestment of its European glass packaging business and 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. Rexam's clients include Anheuser-Busch, Cadbury-Schweppes, Carlsberg, Coca-Cola, Heineken, InBev, Pepsi, Proctor & Gamble, Red Bull and SABMiller.

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