LONDON (July 3, 8:50 a.m. ET) — Rexam plc is selling its personal care packaging division for $709 million to two separate buyers.
An affiliate of private equity firm Sun Capital Partners Inc. has made a binding offer for Rexam's cosmetics, toiletries and household care products business for $459 million in cash, according to London-based Rexam. The deal is subject to consultation with various European works councils.
Meanwhile Silgan Holdings Inc. has agreed to buy Rexam's thermoformed high-barrier food packaging business for $250 million in cash.
Tony Allott, president and CEO of Silgan, said in a news release that the deal gives Silgan low-cost technology for the shelf-stable food market. He said the business fits into Silgan's metal food can and vacuum closure businesses.
“The ability to provide our existing customers with product line extensions that offer convenient, on-the-go capabilities makes it an excellent fit within the Silgan suite of products,” Allott said.
Rexam had announced in November that it was seeking buyers for the personal care packaging division, as a result of ongoing weaknesses in its key markets.
Rexam said the Sun Capital deal is scheduled to close in the fourth quarter, and the Silgan deal in the third quarter.
Rexam said it would carry out a restructuring program after the sale “to remove residual overheads.”
Restructuring, together with certain separation costs, will result in an exceptional charge of 40 million pounds sterling ($63 million) in 2012, of which 25 million pounds sterling ($39 million) will be cash costs. Annual retained fixed costs of 7 million pounds sterling ($11 million) will be absorbed by Rexam's beverage can and healthcare businesses, the company said.
Following completion of the deal, Rexam said it planned to return around 370 million pounds sterling ($581 million) at current exchange rates to shareholders via a redeemable B share scheme, together with a share consolidation.
In total, the personal care business employs 7,000 in Europe, the
Rexam is retaining one major plastics holding, its healthcare division, which makes delivery devices such as insulin pens, asthma inhalers and pumps as well as bottles and closures.