Silgan Holdings Inc. is acquiring injection molder Gateway Plastics Inc., a Wisconsin-based maker of packaging for the food, pet care, nutraceutical and chemical markets.
The $485 million deal adds Gateway's 350,000-square-foot manufacturing facility in Mequon, Wis., near Milwaukee, to Silgan's plastics manufacturing footprint in North America.
Silgan's plastics business will add about $150 million in annual sales, along with $46 million in adjusted earnings before interest, taxes, depreciation and amortization.
Silgan, in making the purchase, specifically pointed to automation used by Gateway and the impact that technology can have on the wider company.
"This acquisition further expands our comprehensive product offering in dispensing and specialty closures and provides further growth opportunities with many of our existing and shared customers," Silgan CEO Adam Greenlee said in a statement. "We believe Gateway's advanced automation platform can be leveraged across much of Silgan's manufacturing footprint."
Gateway began operations in 1970 and will be "slightly accretive" to earnings this year with more expected next year, Silgan said.
Silgan said the deal will include some tax benefits of approximately $90 million and the new owner expects to save about $2 million within the next year through greater buying power.
Silgan is borrowing money through its senior secured credit facility to fund the acquisition.
"Gateway has existing capacity for growth as it is very well capitalized with state-of-the-art equipment and market-leading capabilities," Greenlee said.
Gateway's strengths include in-house packaging design, tooling, mold construction and secondary operations such as assembly, warehousing and distribution.
Silgan's purchase of Gateway follows last year's acquisition of Albéa Group's dispensing business for $900 million. This business primarily was the former Rexam Personal Care business acquired by Albéa in 2013.
Silgan also purchased Cobra Plastics Inc. of Macedonia, Ohio, in 2020, a maker of injection molded closures. Cobra, formerly called Le-Air Molded Plastics Inc., had annual sales of about $30 million.
Silgan, the largest maker of metal food containers in North America, posted revenue of $4.9 billion in 2020. The company has a network of 110 manufacturing sites in North America, South America, Europe and Asia.
The company's dispensing and specialty closures segment had sales of $1.71 billion in 2020. Key markets for the dispensing and plastic and metal closures include food and beverage, health care, garden, home, personal care and beauty.
Silgan's custom containers division makes both custom and specially designed plastic containers for personal care, health care, food and beverage, household, industrial chemical and pharmaceutical markets.
Silgan, thanks to a broad portfolio of products and processing technologies, holds top spots in three Plastics News annual surveys of North American plastics processors. The company is No. 9 in injection molding, No. 21 in thermoforming and No. 8 in blow molding.