O-I to acquire Vitro's Food and Beverage business
Owens-Illinois, Inc. (NYSE: OI) announced May 13, 2015 that it has reached a definitive agreement with Vitro, S.A.B. de C.V. (BMV: VITROA), to acquire Vitro's 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 O-I's position as the world's foremost glass container producer. 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 $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. 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...
Owens-Illinois, Inc. (NYSE: OI) announced May 13, 2015 that it has reached a definitive agreement with Vitro, S.A.B. de C.V. (BMV: VITROA), to acquire Vitro's 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 O-I's position as the world's foremost glass container producer. 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 $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. 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. 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."
"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 Adriàn Sada González, chairman of Vitro, S.A.B. de C.V. "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."
O-I has secured committed financing from Deutsche Bank to fund the transaction and expects to utilize the strong free cash flow of the combined business to reduce leverage following the transaction.
Deutsche Bank Securities is serving as financial advisor to O-I on the transaction and Simpson Thacher & Bartlett LLP is serving as legal advisor.
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