Although the two companies are both focused on food and beverage packaging, they are both significant players in the market for plastic tubes and bottles in the cosmetics and personal care arena.
The acquisition is valued at $4.1bn, and the deal assumes Graham Packaging’s current debt load, as well as paying shareholder $19.56 per share, a buy out deal that represents a 17 percent premium on the stock market value as of April 12.
Significant cost synergies
“Silgan and Graham share a common operational discipline focused on returns on capital and cash flow generation,” said Tony Allot, Silgan CEO and president.
“This acquisition will provide significant cost synergies, while efficiently utilizing the debt capacity of our balance sheet,” said Allot, who added his belief that the deal will serve to enhance both its relations with global customers and target end markets.
On the cosmetics and personal care front it is Silgan that is the biggest player. It is a major supplier of plastic containers to the personal care industry worldwide and this business division generates an annual income of nearly $0.6bn.
Creating a business with a $6.2bn turnover
Graham packaging also produces rigid packaging for some of the biggest global brand holders, including Hawaiian Tropics, Clinique, Kao, Procter & Gamble and L’Oreal
The deal makes the combined businesses a new packaging power house, with an estimated global turnover of $6.2bn, and 17,000 employees operating 189 manufacturing facilities in 19 countries.
In 2010 Silgan had an estimated turnover of $3.1bn, while Graham Packaging achieved approximately $2.8bn from a workforce of 8,100 people working in 97 plants in country countries.