Silgan Plastics Corp. has beefed up its blow molding lineup with the acquisition of Rexam plc's North American bottle operations.
Silgan of Chesterfield, Mo., paid £18.9 million ($30.6 million). Silgan's parent, Silgan Corp. of Stamford, Conn., went public last month, promising at the time to invest in acquisitions to expand its plastics operations.
The deal, part of a global restructuring plan at Rexam, includes plants in Flora, Ill.; Lachine, Quebec; and Scarborough, Ontario. The three plants, which had been part of the Rexam Containers division, do injection blow and injection stretch blow molding.
Rexam Containers produces bottles from polyethylene, polypropylene and PET for a range of markets including the food, pharmaceutical, chemicals and personal-care sectors, according to Battle Wall, head of packaging at Rexam Inc. at Charlotte, N.C.
Wall, who said he was closely involved in the sale, said Silgan was not alone in bidding for the three plants. The cash deal does not include Rexam's plastic film, closure, converting or rotary thermoformed container businesses in North America.
Silgan is a major custom blow molder of PET and high density PE containers. According to its recent 10-K, Silgan Plastics reported $18.4 million in profit in 1996 on sales of $216.4 million.
The plastics operations employ 1,850 and operate more than 100 blow molding machines.
Neither Rexam nor Silgan would provide details about the size of the Rexam blow molding operations. The firm last was included in Plastics News' ranking of North American blow molders in 1993, with estimated sales of $20 million and 350 employees. Rexam, then called Bowater plc, bought the operations from Cope Allman plc of London in 1992.
Silgan Plastics did not respond to questions about the purchase or plans for its new operations.
The North American disposal involved commodity businesses where Rexam had to compete with giants like BTR plc's Continental PET Technologies Inc. of Florence, Ky., according to London packaging analyst Tim Rothwell of Gerrard Vivian Gray.
``Obviously they did not produce the profit levels [necessary] and are not regarded as core operations,'' Rothwell said, noting that Rexam kept its specialized rotary thermoforming plants at Union, Mo., and Flora, Ill.
In addition, he pointed out, Rexam has kept its plastic closures operations, which include plants in Evansville and Princetown, Ind. In 1995 Rexam closed its Shore-Reboul Inc. closure plant in Freeport, N.Y.
``They are retaining certain plastics operations where they have a technological advantage or where they have a strong market position,'' Rothwell said.
London-based Rexam is selling off 20 of its less-profitable businesses.
Silgan Corp., which also makes plastic bowls, metal closures and metal and paper containers, has been following a policy of expansion of custom plastics molding since its formation in 1987. Plastics container sales have increased from $88.8 million in 1987, largely through acquisitions.