Alcan Inc. may sell its food-packaging bottles unit, an operation that pioneered the use of multilayer and transparent polypropylene containers while operating as part of Pechiney Group.
New York-based J.P. Morgan Securities Inc. will shop the Chicago-based unit to potential buyers. Montreal-based Alcan, an aluminum and plastics giant, bought Paris-based Pechiney in December 2003 and has reworked plants and operating units since then.
The sale properties include plants in Batavia, Ill.; Bellevue, Ohio; Newark, Calif.; Brampton, Ontario; and Uchaux, France, said Polly Moles, a spokeswoman for the unit. The operations blow mold bottles for juice, food-service products, energy drinks, coffee beverages and infant formulas, and make barrier and multilayer containers for ketchup and pasta sauces.
While the company molds bottles in polyethylene, it has become one of the larger makers of PP bottles in North America.
The unit recorded $130 million in sales last year and has 495 employees, Moles said. According to a source familiar with the sale process, the business could fetch as much $175 million to $180 million. Alcan announced July 8 it is exploring a sale.
Pechiney considered selling the operation two years ago, the source said. At that time, PP was considered an industry darling and was talked about as a replacement for PE.
Since then, processing issues have dimmed that glow and continued investment is needed in the technology, the source said. That could diminish interest from equity firms, which might not want to invest considerably in PP bottles before realizing a return, the source said. But for a competitor, the prospect of launching a new material and adding capacity could be intriguing.
``They might be selling it two years too late to generate the same amount of interest,'' the source said. ``It doesn't make sense for some [financial] sponsors to do this. There'll be limited strategic interest, depending who has the money for it.''
However, the current acquisition climate could favor a potential sale, said Nick Pavlidis, vice president of investment banking for Baird Capital Partners in Chicago.
Many packaging companies now are up for sale, and both strategic and financial groups are looking for acquisitions, he said. That might not have been the case two years ago.
``These buyers are not looking for troubled or turnaround situations,'' he said. ``They want properties with a good market position. The idea of spending capital to grow a business would not turn off a private equity owner, but that might be reflected in the purchase price.''
Ilene Gordon, president of Alcan Packaging Food Americas, said in a news release that the business is known for its multilayer bottle technology with hot- and cold-filled bottles. ``We are confident that we can find a strategic buyer that will be attracted to the growth and profit potential of the business,'' she said.
Including Pechiney, Alcan recorded sales of $24.8 billion last year. The company has other blow molding operations that are not part of the sale, including its Wheaton Inc. unit, which makes personal-care and pharmaceutical bottles.
Selling the food-packaging bottles unit would allow Alcan to focus more resources on flexible packaging, where the company has its best growth opportunities, said Alcan President and Chief Executive Officer Christel Bories. Those operations include some in high-barrier film that were owned by Pechiney.
Alcan's blow molding operations recorded overall global sales of about $250 million last year, according to a source familiar with the business.
