Silgan Announces Agreement to Acquire WestRock’s Specialty Closures and Dispensing Systems Business
January 23 2017 - 7:30AM
Business Wire
Acquisition Further Broadens Closure Franchise
into the Highly Engineered Dispensing Systems Market
Investor Conference Call at 9:00 a.m. ET on
January 23, 2017
Silgan Holdings Inc. (NASDAQ:SLGN), a leading supplier of rigid
packaging for consumer goods products, announced today that it has
entered into a definitive agreement with WestRock Company
(NYSE:WRK) to acquire its specialty closures and dispensing systems
business. This business is a leading global supplier of highly
engineered triggers, pumps, sprayers and dispensing closure
solutions to major branded consumer goods product companies in the
Home, Health and Beauty markets. It operates a global network of 13
plants across North America, Europe, South America and Asia. For
the fiscal year-ended September 30, 2016, this business generated
sales of approximately $566 million.
“This acquisition significantly enhances the scope and breadth
of our market leading closure franchise by bringing new
capabilities in the highly engineered dispensing systems category,”
said Tony Allott, Silgan's President and Chief Executive Officer.
“This business has a long history as a differentiated packaging
franchise with deep customer relationships, a clear focus on the
needs of its customers and markets and a strong track record for
product innovation to meet these needs. This acquisition allows us
to further build relationships with common global customers,
provides significant opportunities for cost synergies, creates an
incremental platform for growth and strongly enhances 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.
The purchase price for this acquisition is $1.025 billion,
subject to adjustments outlined in the purchase agreement for this
acquisition. The transaction is subject to the satisfaction of
certain customary conditions and receipt of applicable regulatory
approvals and is expected to close late in the first quarter of
2017. Silgan expects to initially fund the purchase price for this
acquisition from a combination of cash on hand and borrowings under
the Company’s senior secured credit facility, including a committed
incremental term loan.
This acquisition is expected to be accretive to earnings,
excluding the impact of the required purchase accounting
adjustments. The transaction will become more accretive as
synergies are phased in over the next 24 months following the
closing.
Highlights of the transaction:
- Market Focus: Following the
acquisition, Silgan will expand its leadership position in the
global closure market to include highly engineered dispensing
systems for food, beverage, health care, garden, home and beauty
products, in addition to Silgan’s current offerings in hotfill
vacuum closures and coldfill closures.
- Synergies: Silgan expects to
realize operational cost synergies of $15 million within 24 months
following the acquisition. These synergies will be achieved
primarily through reductions in general and administrative
expenses, procurement savings and manufacturing efficiencies.
- Financial Impact: Silgan expects
the transaction to be accretive to earnings, excluding the impact
of purchase accounting adjustments, and significantly accretive to
free cash flow per share in 2017.
- Financing: Pro forma for the
transaction, Silgan’s net leverage ratio under its credit facility
will be approximately 4.3 times, which is consistent with past
levels following acquisitions. Silgan expects to finance this
transaction with debt at an attractive cost. Given its pro forma
free cash flow profile, Silgan expects its net leverage ratio to
return to its target range in the next 24 months.
Investor Conference Call Dial-In
Information:
Silgan will hold an investor call today at 9:00 a.m. ET to
discuss this transaction. Given that Silgan will be issuing a press
release with regard to its year end earnings on January 31, 2017,
after the U.S. markets close, comments will be limited to the
transaction. In order to hear the audio for the conference call,
you must dial the number listed below at least 5 minutes before the
conference call and reference the listed pass code for the operator
or automated response system.
Audio Dial-In Number:
U.S. and Canada – (877) 795-3638 International – (719)
325-4807
Pass Code: 6624695
Additionally, you should go to this link to view the slide
presentation for the conference call no more than 10 minutes prior
to the start time. You may click the following link directly or cut
and paste the following link into your browser:
https://slideassist.webcasts.com/starthere.jsp?ei=1133061
For those unable to listen to the live conference call, a taped
rebroadcast will be available through February 2, 2017. To access
the rebroadcast, U.S. and Canadian callers should dial (888)
203-1112 and international callers should dial (719) 457-0820. The
pass code for the rebroadcast is 6624695. To access the slide
presentation for the rebroadcast, you may click on the following
link directly or cut and paste the following link into your
browser:
https://slideassist.webcasts.com/starthere.jsp?ei=1133061
Silgan is a leading supplier of rigid packaging for consumer
goods products with annual net sales of approximately $3.8 billion
in 2015. Silgan operates 87 manufacturing facilities in North and
South America, Europe and Asia. Silgan is a leading supplier of
metal containers in North America and Europe and a leading
worldwide supplier of metal, composite and plastic closures for
food and beverage products. In addition, Silgan is a leading
supplier of plastic containers for shelf-stable food and personal
care products in North America.
Statements included in this press release which are not
historical facts are forward looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and the Securities Exchange Act of 1934, as
amended. Such forward looking statements are made based upon
management's expectations and beliefs concerning future events
impacting the Company and therefore involve a number of
uncertainties and risks, including, but not limited to, those
described in the Company's Annual Report on Form 10-K for 2015 and
other filings with the Securities and Exchange Commission.
Therefore, the actual results of operations or financial condition
of the Company could differ materially from those expressed or
implied in such forward-looking statements.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170123005496/en/
Silgan Holdings Inc.Robert B. Lewis, 203-406-3160
Silgan (NASDAQ:SLGN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Silgan (NASDAQ:SLGN)
Historical Stock Chart
From Apr 2023 to Apr 2024