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Berry Plastics buying Rexam's remaining healthcare operation

By: PLASTICS NEWS REPORT

March 24, 2014

Berry Plastics Group Inc. is buying the containers and closures division of Rexam plc’s healthcare operation for $135 million in cash, London-based Rexam announced on March 24.

The deal, once approved and following consultation with Rexam’s French works council, is expected to complete around the middle of this year. Rexam has been selling units to focus solely on its can operations.

The deal includes eight manufacturing locations — five in the United States and one each in Mexico, France, and India, with total employment of approximately 1,500 and 2013 sales of $262 million. It includes the Rexam Mold Manufacturing group in Buffalo Grove, Ill., which produces tools used for the company's healthcare businesses.

Berry Plastics, based in Evansville, Ind., reported 2013 sales of $4.715 billion, and has been active in acquiring plastics businesses — most recently it bought a controlling interest in Qingdao P&B Co. to give it a bigger foothold in China.

Christopher Manuel, a senior analyst with Wells Fargo Securities, called the deal with Rexam "a solid opportunity for Berry to cultivate synergies.

"In its current state, we estimate EBITDA [earnings before interest, taxes, depreciation and amortization] from the containers & closures to be $18 million to $20 million," Manuel wrote in a March 24 email. "From Berry's perspective we believe the synergy opportunity could be meaningful as the company folds the business into existing operations (similar to the Rexam SBC business), though this would likely come at a cost."

Rexam’s healthcare business is divided roughly into three business segments — devices, prescription retail packaging and containers and closures.

Last month Rexam announced the proposed sale of the pharmaceutical devices and prescription retail packaging operations of its healthcare division to Montagu Private Equity for $805 million.

At the time of that deal, Rexam said it was “in discussions” regarding the sale of the remaining third of its healthcare business, its closures and containers operation.

Rexam said the sale to Montagu Private Equity was “progressing according to plan” and was expected to complete in the second quarter of 2014.

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.

PRW.com contributed to this report. Watch PlasticsNews.com for updates to this story.