I just want to say one word to you: Plastics!
UK-based Rexam PLC, a leading packaging company and the world' largest beverage can maker, announced it is acquiring a plastics unit from US-based Owens-Illinois. The deal these two packaging giants is for $1.83 billion.
The division, called, O-I Plastic Products FTS, specializes plastic healthcare packaging, such a pharmaceutical containers. Key medical industry clients include Pfizer, Bausch & Lomb, and Bristol Myers Squibb. The company also makes plastics containers for such clients as PepsiCo. Coca-Cola, and Procter & Gamble. Other Rexam clients (in the sector) include Anheuser-Busch, Carlsberg, Coca-Cola, Heineken, PepsiCo, Procter & Gamble, Red Bull, and SABMiller. The buyout will allow it to expand its offerings to certain key customers.
Rexam will combine the O-I unit ($700 million in revenue in 2006) with its own plastics operations, which involve food packaging, beverages, and some such items as dispensers for the drug industry. The new acquisition will expand Rexam's operations in sector by about 60%. Rexam currently supplies packaging to such companies as L'Oréal and Givenchy, along with the beverage companies.
The divisions will give Rexam wider sales coverage. Much of its sales are in Europe, while the O-I division has sales mostly in the US.
Owens-Illinois is planning to concentrate on its specialty glass holdings. It also needs the cash to pay off years of asbestosis lawsuits. Meanwhile, Rexam is getting out of the glass beverage container business. A few months ago, sold off its UK glass bottle division for €660m to Ireland-based Ardagh in March this year.
This follows General Electric's announcement of the sale of its plastics business. Plastics has become a riskier business because of the rising price of petroleum.
Of course, for every seller there is a buyer, and vice versa. Each thinks that getting into/getting out of the plastics business or maximizing/minimizing its position in the glass industry is a positive step. For us, it's the endless gin game - every company is trying to adjust the hand it holds, and a card that benefits me may be one that you have no use for.
10:44:07 PM 
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