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Rexam looks to sell its healthcare operation

By: Rhoda Miel

June 25, 2013

Packaging giant Rexam plc has announced it plans to sell its healthcare operation.

The division accounted for around 10 percent of the London-based company's £4.3 billion in sales last year, and 11.5 percent of its underlying operating profits.

Once a deal had gone through Rexam would be a "focused beverage cans business", said CEO Graham Chipchase.

Last year Rexam sold its personal-care packaging division for $709 million to two separate buyers, leaving the healthcare operation as its major remaining plastics holding. Rexam's healthcare division makes delivery devices such as insulin pens, asthma inhalers and pumps as well as bottles and closures.

Rexam wants to concentrate on its beverage packaging industry, which is the bulk of its sales, Chipchase said during a June 25 telephone conference call with analysts.

"The big picture is something that we've been saying for the past six months, that at 10 percent [of overall sales] of the group, healthcare is not core," Chipchase said.

Healthcare is divided roughly into three business segments, he said — devices, prescription retail packaging and containers and closures. Its Rexam Mold Manufacturing group in Buffalo Grove, Ill., produces tools used for the company's healthcare businesses.

The healthcare group has some strong future business in the pipeline, especially in the medical devices area, but the bulk of those will not go into commercial production for two to three years.

At the same time, the market for mergers and acquisitions is starting to heat up currently, which means that the time may be right to hammer out a deal with a buyer looking for a solid investment with strong potential for growth.

"As to why are we looking at selling it now, there are a couple of things," Chipchase said. "One is that the business team there at healthcare has stabilized the business. The second thing is that we always said that we would consider good offers for the business. We haven't had any offers but we've had a lot of interest at the moment, so now is the time to start thinking about it."

Rexam will only sell if it receives an attractive offer, he said.

Plastics & Rubber Weekly contributed to this report.