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

China's biggest fuel tank maker getting a US foothold

April 23, 2014 4:41 pm ET

The majority owner of China's biggest fuel tank maker is expanding its global automotive footprint with the acquisition of the fuel tank unit of...    More

Image

How CEO Santi is changing ITW

April 23, 2014 2:48 pm ET

Scott Santi is showing he can do more than just cut costs at Illinois Tool Works Inc.    More

Quality Vision buys ShapeGrabber

April 23, 2014 10:19 am ET

Quality Vision International Inc. of Rochester, N.Y., has purchased ShapeGrabber Inc., a maker of automated three-dimensional scanners, in a deal...    More

Image

Pregis Corp. to get new owner

April 22, 2014 11:44 am ET

The private equity owner of Pregis Corp. is selling off its North American operations for an undisclosed sum.    More

Image

German electronics firm expanding in Hungary

April 22, 2014 9:46 am ET

German electronics manufacturer Provertha GmbH has announced plans to set up a new plastic galvanizing plant at the Kapuvár Industrial Park, in northw...    More

Market Reports

Market Data Book - Rankings & Lists

A one-stop download of Plastic News' exclusive annual lists and processor rankings containing essential data including sales, employees, end markets, materials and more.
EXCLUSIVE EXCEL FEATURE: full mailing address details for available plant locations.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Mold Making and Tooling Review and Outlook 2014 – North America

This report provides in-depth analysis of the mold and toolmaking market for North America, including discussions of trends, opportunities, threats, the latest developments in production and labor and equipment trends impacting moldmakers.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

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

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events