In a continuing effort to lower its debt, Crown Cork & Seal Inc. plans to sell off another piece of its Risdon-AMS packaging division to a European equity firm.
Philadelphia-based Crown Cork will sell two European plants that mold pharmaceutical products. The buyer is HSBC Private Equity Ltd. of London. The plants, in Offranville, France, and Neuenburg, Germany, are part of Crown Cork's Risdon health and beauty products unit.
Terms of the deal, announced March 4, were not disclosed. The plants recorded sales of 44 million euros ($38.6 million) in 2001. The deal is to be completed by the end of March, said Jean-Louis Pacquement, managing director of HSBC's pharmaceutical sector.
Crown Cork had shopped the facilities to several industry players before opting to sell them to a financial group, Pacquement said. Investment group HSBC manages a fund worth more than 2 billion euros ($1.75 billion) and owns several other European manufacturers, including the former plumbing division of Caradon plc.
The firm generally looks to buy and grow companies in a time frame of three to seven years before selling them, Pacquement said. The Risdon Pharma facilities fit its portfolio by offering products with high profit margins in a strong niche market, said Pacquement, who is based in Paris.
``It has a strong upside for further expansion in Europe and possibly the United States at some stage,'' Pacquement said by telephone. ``We really want to boost [Risdon Pharma] as much as possible and support a development program that is quite ambitious.''
The facilities offer such products as eyedroppers, nasal sprays, pill jars and drug-delivery devices for personal and surgical use. The company, employing about 300, also prints, decorates and assembles its pharmaceutical lines.
The Crown Cork deal comes on the heels of its sale in December of its fragrance-pump-making business to Rexam plc for $107 million. The pump unit, based in Thomaston, Conn., also was part of the company's Risdon-AMS operation.
Crown Cork has attempted to reduce its debt load of more than $4.8 billion and offset asbestos claims. Meanwhile, the company's PET bottle business has struggled with lower margins and increased competition, said Huston Keith, a packaging consultant with Keymark Associates Inc. of Marietta, Ga.
``The PET bottle business has not been really good for awhile,'' Keith said.
Crown Cork recorded sales of $7.1 billion in 2001, but lost $972 million in that period. The company also made $118 million in asbestos-related payments last year. Crown Cork officials were not available for comment.
Meanwhile, the pharmaceutical sector is both stable and continuing to grow, Pacquement said.
``It is not a huge market, but is a very good niche,'' he said. ``So there is a lot of work to be done there."