Silgan Holdings Inc. (SLGN) has completed the previously announced acquisition of the food can business of Vienna, Austria-based Vogel & Noot Holding for 260 million euros (approximately $358.8 million). The transaction will dilute fiscal 2011 first quarter earnings due to the initial write-up of inventory required for accounting purposes but is expected to be accretive to full year 2011.
The aforesaid purchase price includes assumed net indebtedness of approximately 31.7 million euros (or approximately $43.7 million). Silgan funded the acquisition through Euro denominated revolving loan borrowings under its senior secured credit facility.
Vogel & Noot operates 12 food can manufacturing facilities throughout Central and Eastern Europe with three more slated to come into operation in the future. The Vogel & Noot business will now operate under the name of Silgan Metal Packaging and continue to be headquartered in Vienna, Austria. The acquired company’s solid footprint in this region would not only strengthen Silgan’s metal food can business in Europe but augur well for its worldwide operations.
In addition, Silgan closed the acquisition of the twist-off closure business of Poland-based DGS S.A. for 15.8 million euros (or approximately $21.7 million). The acquired business will operate as a part of the Silgan White Cap Europe business headquartered in Hannover, Germany and will be integrated into Silgan’s existing metal closure operations. The acquisition is expected to be neutral to 2011 earnings after accounting for the write-up of inventories.
Silgan is currently the largest manufacturer of metal food containers in North America, hogging approximately half of the U.S. market in 2010. The Vogel and Noot buy would further extend the company’s leading position into North America and Europe. Silgan has increased its sales and market share through acquisitions as well as internal growth and, in the process, expanded and diversified its customer base, geographic presence and product lines. In addition to acquisitions, Silgan continues to make significant capital investment in its metal food container business offering its customers value-added features.
The company is currently undertaking diverse corporate development activities, including manufacturing efficiencies, which are likely to fetch incremental volumes across the segments. We expect volumes to gradually recover with the improving economy. We currently have a Zacks #2 Rank (short-term Buy recommendation) on the stock.
Silgan is a leading manufacturer of consumer goods packaging products operating 68 manufacturing facilities in North and South America, Europe and Asia. In North America, Silgan is the largest supplier of metal containers for food products and a leading supplier of plastic containers for personal care products.
In addition, Silgan is a leading worldwide supplier of metal, composite and plastic vacuum closures for food and beverage products. It operates through three segments, namely Metal Food Containers, Closures and Plastic Containers. Silgan competes with the likes of Ball Corporation (BLL), Crown Holdings Inc. (CCK) and privately held Berry Plastics Corporation.
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