O-I spends $2.15 billion in cash in acquisition
Purchase of Vitro's food and beverage glass container business to provide O-I with a leading presence in Mexico.
June 19, 2015
by Canadian Packaging staff
PERRYSBURG, OH—This past May, Owens-Illinois (O-I), Inc. reached a definitive agreement with Vitro, S.A.B. de C.V. of Mexico, to acquire its food and beverage glass container business in an all-cash transaction valued at approximately $2.15 billion.
Vitro is the largest supplier of glass containers in Mexico.
The transaction, which has been approved by the boards of directors of both companies, is subject to approval by Vitro’s shareholders and customary regulatory approvals. The deal is expected to close within 12 months.
The transaction provides O-I with a competitive position in the attractive and growing glass segment of the packaging market in Mexico, further enhancing its position as the world’s foremost glass container producer.
The deal 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 $945 million and adjusted EBITDA of $278 million.
Further, O-I expects to realize approximately $30 million in run-rate cost synergies by 2018 through a combination of procurement savings and operating efficiencies.
“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,” says O-I chairman and chief executive officer Al Stroucken. “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. In the third year after close, this compelling transaction is expected to add approximately $0.50 to our earnings per share and at least $100 million in free cash flow, positioning us to drive even greater value for shareholders.”
Vitro chairman Adriàn Sada González adds: “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.
“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.”
Owens-Illinois, Inc. is the world’s largest glass container manufacturer and preferred partner for many of the world’s leading food and beverage brands. The company had revenues of $6.8 billion in 2014 and employs approximately 21,100 people at 75 plants in 21 countries. With global headquarters in Perrysburg, OH in the U.S., O-I delivers safe, sustainable, pure, iconic, brand-building glass packaging to a growing global marketplace. For more information, visit www.o-i.com.