Closure: Silgan acquires Portola for $266m

Silgan said it expects the deal to be slightly beneficial to earnings at first, excluding the impact of the purchase and the write-up of inventory.

It will become more beneficial as synergies take hold over the next eighteen months following the closing.

The supplier of rigid packaging expects to fund the purchase price from a combination of cash on hand and borrowings under their senior secured credit facility.

Expand Europe base​

Portola Packaging is a manufacturer of plastic closures with sales of $200m in 2012 and operates eight facilities in North America and Europe.

“Portola has a strong reputation as an innovator in closure design and operational leadership. As a result, we believe this acquisition will be highly synergistic with our existing closure business, while providing a broader platform to service our customers’ market needs.​

“In addition, we are excited about the opportunity to expand our relatively small European plastic closure presence through Portola’s manufacturing facilities in the United Kingdom and Czech Republic,” ​said Bob Lewis, executive vice president and chief financial officer.

The transaction is expected to close in September, subject to certain customary conditions and regulatory approvals.

Closure investment​

Earlier this year, Portola shut one site and expanded two others​ as part of a $12m investment in its closures business.

In its Q2 results Silgan reported that continued political instability​ in Venezuela, Turkey and Jordan led to lower operating income from the Closures segment because of delays in sourcing steel as a result of political instability and currency restrictions.

However, they added that while there had been no domestic steel supply in Venezuela the situation was starting to get better.