Glass container maker, Owens-Illinois, Inc. has completed the acquisition of the food and beverage glass container business of Mexican company, Vitro, for $2.15 billion. This deal will give the company a competitive edge in the attractive and growing glass segment of the packaging market in Mexico, further solidifying its position as the world’s leading glass container producer.
Vitro is the largest supplier of glass containers in Mexico and manufactures glass containers for diverse end uses, including food, soft drinks, beer, wine and spirits. The acquired business will add annual revenues of $945 million and adjusted EBITDA of $278 million. Owens-Illinois expects to realize approximately $30 million in run-rate cost synergies by 2018 through both procurement savings and operating efficiencies. The transaction is expected to be accretive to cash flow and earnings per share in 2016. Owens-Illinois anticipates that in the third year after closing, earnings per share accretion will reach approximately 50 cents per share.
The deal involves Vitro’s five food and beverage glass container plants in Mexico, a plant in Bolivia and the food and beverage business of Vitro Packaging, its North American distribution business based in Plano, TX with a total workforce of around 6,000 people. The current management team of Vitro’s food and beverage glass container business will remain in place following the acquisition.
This is another notable deal in the packaging industry following the announcement of Rock-Tenn Company’s merger with MeadWestvaco Corporation to form WestRock Company in January. This collaboration is touted to be one of the major deals in the paper packaging industry as it will create the second-largest U.S. packaging company worth $16 billion, trailing only International Paper Company, which has a market capitalization of nearly $22 billion.
Apart from the Vitro acquisition, Owens-Illinois will benefit from the agreement with Constellation Brands Inc., European asset optimization program and share repurchases. However, unfavorable foreign currency translation, slowdown in beer demand in North America and weak demand in South America, will hurt the company’s growth.
3M and Dow have announced they are cutting thousands of roles from their global workforces in response to economic pressures. Dow has said it will cut 2,000 jobs across its global workforce (around 5%) in a bid to save US$1bn in 2023. The company says it will also cut costs by shutting down “select assets”, though it did not note where it would halt operations.
Sweden’s state mining firm has discovered what could be Europe’s largest rare earths deposit, and says it could help the bloc reduce its reliance on imports of minerals needed to manufacture clean technologies and meet climate targets.
Henkel and Avantium have been partners since 2019, when Henkel joined the PEFerence consortium. This consortium of partners, coordinated by Avantium, aims to establish an innovative supply chain for FDCA and PEF (polyethylene furanoate).