Owens-Illinois Inc has reached a definitive agreement with Vitro o acquire its food and beverage glass container business in an all-cash transaction valued at around $2.15bn.
Vitro is the largest supplier of glass containers in Mexico. The transaction provides O-I with a competitive position in the attractive and growing glass segment of the packaging market in Mexico.
The agreement includes Vitro’s five plants in Mexico and one in Bolivia, which together employ 4,700 people. The current leadership of Vitro’s food and beverage glass container business will remain in place following the transaction close. The acquired business is expected to generate estimated annual revenue of $945m and adjusted EBITDA of $278m. Further, O-I expects to realise approximately $30m in cost synergies by 2018 through a combination of procurement savings and operating efficiencies. The transaction is expected to be accretive to cash flow and earnings per share in the first year after closing.
“We have long admired Vitro’s business, and this transaction marks an important strategic step for O-I in that it allows us to establish a strong position in the attractive glass container segment in Mexico,” said Al Stroucken, chairman and CEO of O-I. “Vitro’s leading position, long-term customer relationships and proven record of innovation and new product development will enable us to capitalize on commercial opportunities in Mexico.
“O-I is a clear leader in the global glass container market and is the ideal partner for Vitro’s food and beverage container business,” said Vitro chairman Adriàn Sada González. “We have a great deal in common with O-I and look forward to the expertise they bring to help meet the growing demands of our customers.”
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