Silgan buying Portola for $266 million

By Jim Johnson
Senior Staff Reporter

Published: August 13, 2013 5:52 pm ET
Updated: August 26, 2013 2:17 pm ET

Related to this story

Topics Mergers & Acquisitions, Containers/closures, Packaging, Blow Molding, Compression molds, Injection Molding

Just last fall, Portola Packaging Inc.'s CEO talked about recovering from filing for Chapter 11 bankruptcy protection and expressed excitement about what the future holds.

Less than a year later, the Naperville, Ill.-based maker of plastic closures now sees that future as part of Silgan Holdings Inc., a $3.6 billion maker of plastic and metal containers and closures with 81 plants around the world.

Silgan, of Stamford, Conn., is paying $266 million for the firm.

Bolting on Portola's $200 million in annual sales and eight plants in both North America and Europe beefs up Silgan's global closure business.

Silgan, in making the transaction, pointed to Portola's innovation in closure design and operational leadership.

Portola, back in 2008, went through what is known as a prepackaged Chapter 11 reorganization where holders of senior debt took over the company. Since then, the company has focused on lean manufacturing, cutting employee ranks from 1,100 to 700, CEO Kevin Kwilinski said at the Plastics Caps & Closures 2012 conference in September near Chicago.

"It took us a few years to get our feet under us," Kwilinski said at the show last year. "But now that we've done it we have … an opportunity to grow the business and we're very excited about what the future holds."

Plastics News coverage of the company's Chapter 11 case in 2008 indicated that Wayzata Investment Partners LLC was one of the larger holders of the company's senior notes at the time and was going to provide $10 million to fund the restructuring. Wayzata currently lists Portola as one of its investments on its website.

Portolo Chief Financial Officer Glenn Fish declined comment on the deal.

Silgan indicated in a news release the new business will be "slightly accretive to earnings initially, excluding the impact of the required purchase accounting write-up of inventory." Profits will grow during the next 18 months as Portola is folded into Silgan.

Adding Portola's assets could add a nickel to a dime per share to earnings in 2014, according to a research note from Wells Fargo Securities LLC.

"We are excited about the opportunity to expand our relatively small European plastic closure presence through Portola's manufacturing facilities in the United Kingdom and Czech Republic," Silgan CFO Bob Lewis said in a statement.

Silgan makes both plastic and metal closures, posting sales of $181.4 million in products in just the second quarter alone, making the firm one of the largest caps and closure operations in the United States.

Portola, just last summer, shuttered its cosmetics packaging operations to focus on its core business of closures and bottles.

The cosmetics business accounted for less than 10 percent of sales and the beverage closure business had been growing by double digits annually for the previous three years, the company said last year.

Wells Fargo Securities viewed the deal favorably.

"It provides SLGN with a more formidable position in the European plastics closure market," senior analyst Christopher D. Manuel wrote in the research note.

And, Manual wrote, "It provides SLGN a platform for future expansion in the faster-growing closure/dispensing closure market."

Silgan could use cash on hand or its revolving line of credit to fund the purchase, Wells Fargo anticipated.


Comments

Silgan buying Portola for $266 million

By Jim Johnson
Senior Staff Reporter

Published: August 13, 2013 5:52 pm ET
Updated: August 26, 2013 2:17 pm ET

Post Your Comments


Back to story


More stories

Image

Acquisition expands Rieke Packaging's stake in Asia

July 28, 2014 4:39 pm ET

Diversified rigid packaging components producer Rieke Packaging Systems now has a bigger footprint in Asia.    More

Image

Two medical device makers add specialty products through acquisitions

July 28, 2014 3:02 pm ET

The medical merger mania continues this summer as two more medical device manufacturers are swallowed up by bigger competitors.    More

Image

Deal combines US packaging thermoformers

July 28, 2014 12:42 pm ET

Thermoformed medical packager Nelipak Corp. is expanding its North American holdings and access to the U.S. health care market with the purchase of...    More

Image

Sealed Air's move to Charlotte will put it all under 'One Roof'

July 25, 2014 2:03 pm ET

Sealed Air Corp. shook the ground last week by announcing plans to relocate its headquarters from Elmwood Park, N.J., to Charlotte, N.C., in a move...    More

Image

Tooling Technology has new private equity owner

July 25, 2014 11:55 am ET

New York private equity firm GenNx360 Capital Partners has partnered with management to buy Tooling Technology Holdings LLC, a diversified Ohio-based ...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events