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 — part of the personal-care division — 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 ($63 million) in 2012, of which £25 million ($39 million) will be cash costs. Annual retained fixed costs of £7 million ($11 million) will be absorbed by Rexam's beverage-can and health-care businesses, the firm said.
Following completion of the deal, Rexam said it plans to return around £370 million ($581 million) at current exchange rates to shareholders via a redeemable Class B share scheme, together with a share consolidation.
In total, the personal-care business employs 7,000 in Europe, the United States and Asia. In 2011 the business had sales of £502 million ($787 million) and an operating profit of £38 million ($59 million).
Rexam is retaining one major plastics holding, its health-care division, which makes delivery devices such as insulin pens, asthma inhalers and pumps as well as bottles and closures.
Sun Capital would not comment on the deal. Silgan did not return phone calls seeking comment.
PRW editor Hamish Champ and Plastics News staff reporter Jessica Holbrook contributed to this report.