Silgan to buy part of WestRock
Silgan Announces agreement to acquire WestRock’s Specialty Closures and Dispensing Systems. The acquisition further broadens closure franchise into the highly engineered dispensing systems market.
It operates a global network of 13 plants across North America, Europe, South America and Asia. For the fiscal year-ended September 30, 2016, this business generated sales of approximately $566 million.
–This acquisition significantly enhances the scope and breadth of our market leading closure franchise by bringing new capabilities in the highly engineered dispensing systems category, said Tony Allott, Silgan's President and Chief Executive Officer.
– This business has a long history as a differentiated packaging franchise with deep customer relationships, a clear focus on the needs of its customers and markets and a strong track record for product innovation to meet these needs. This acquisition allows us to further build relationships with common global customers, provides significant opportunities for cost synergies, creates an incremental platform for growth and strongly enhances our free cash flow, continued Mr. Allott.
– We believe this business, like Silgan, holds similar passions for excellence in customer support, quality, safety and competitive franchise positions, while maintaining a strong focus on returns and free cash flow, concluded Mr. Allott.
The purchase price for this acquisition is $1.025 billion, subject to adjustments outlined in the purchase agreement for this acquisition. The transaction is subject to the satisfaction of certain customary conditions and receipt of applicable regulatory approvals and is expected to close late in the first quarter of 2017.
Silgan expects to initially fund the purchase price for this acquisition from a combination of cash on hand and borrowings under the Company’s senior secured credit facility, including a committed incremental term loan.
This acquisition is expected to be accretive to earnings, excluding the impact of the required purchase accounting adjustments. The transaction will become more accretive as synergies are phased in over the next 24 months following the closing.