Silgan Announces Agreement to Acquire Weener Packaging

Rhea-AI Summary

Silgan Holdings Inc. (NYSE: SLGN) has announced an agreement to acquire Weener Plastics Holdings B.V. for an enterprise value of €838 million. Weener is a leading producer of dispensing solutions for personal care, food, and healthcare products, operating 19 facilities globally with 4,000 employees. The acquisition aims to expand Silgan's global Dispensing and Specialty Closures franchise.

Key points:

• Weener generated sales of €450 million and adjusted EBITDA of €96 million in the 12 months ended May 31, 2024
• Silgan expects to realize €20 million in operational cost synergies within 18 months post-closing
• The acquisition is expected to be accretive to adjusted earnings per share in 2025
• Closing is anticipated in Q4 2024, subject to regulatory approvals
• Silgan plans to fund the purchase with cash on hand and borrowings under its senior secured credit facility

Positive

• Expansion of Silgan's global Dispensing and Specialty Closures franchise
• Weener's strong financial performance with €450 million in sales and €96 million adjusted EBITDA
• Expected €20 million in operational cost synergies within 18 months
• Acquisition projected to be accretive to adjusted earnings per share in 2025
• Complementary product offerings and technologies enhancing Silgan's market position

Negative

• Significant acquisition cost of €838 million
• Potential increase in debt due to borrowing for purchase
• Integration challenges with 19 global facilities and 4,000 employees
• Regulatory approval risks that could delay or prevent closing

Insights

Financial Analyst

The acquisition of Weener Plastics by Silgan Holdings is a strategic move that strengthens Silgan's position in the global dispensing and specialty closures market. Silgan expects operational cost synergies of approximately €20 million within 18 months, primarily from procurement savings and manufacturing efficiencies. This is a significant figure that should positively impact Silgan's bottom line. Additionally, with Weener generating sales of €450 million and an adjusted EBITDA of €96 million, this acquisition is projected to be accretive to Silgan's earnings per share by 2025.

On the funding side, Silgan plans to use a combination of cash and borrowings under its senior secured credit facility. How this impacts Silgan's balance sheet will be crucial. Investors should keep an eye on the company's debt levels post-acquisition to ensure that the financial health remains stable.

Market Research Analyst

From a market perspective, Silgan's acquisition of Weener Plastics is a smart play to diversify its product offerings and strengthen its footprint in the personal care, food and healthcare markets. Weener's proprietary manufacturing technologies, including significant clean room capabilities, add value to Silgan's existing operations. This is particularly important given the growing demand for specialized and hygienic packaging solutions, a trend accelerated by the pandemic.

The acquisition also aligns well with Silgan's strategy to expand globally. With Weener’s presence in Europe and the Americas, Silgan gains a wider market reach and stronger customer relationships. Investors should view this as a long-term positive, as it positions Silgan to capture more market share in these growing sectors.

Tech Expert

Weener's advanced manufacturing technologies, including clean room capabilities, offer a competitive edge in the packaging industry. Clean rooms ensure that products are manufactured in contaminant-free environments, which is important for industries like healthcare and personal care. This technological advantage sets Silgan apart from competitors and could attract more high-value contracts from companies that prioritize hygiene and quality.

Moreover, Weener’s focus on innovation and cost leadership complements Silgan’s existing operations. The integration of these technologies can lead to more efficient manufacturing processes, reduced costs and improved product offerings. This synergy will likely enhance Silgan’s market position and drive future growth.

Acquisition Will Expand Leading Global Dispensing and Specialty Closures Franchise

Investor Conference Call at 9:00 a.m. ET on July 24, 2024

STAMFORD, Conn.--(BUSINESS WIRE)-- Silgan Holdings Inc. (NYSE: SLGN), a leading supplier of sustainable rigid packaging solutions for the world's essential consumer goods products, announced today that it has entered into a sale and purchase agreement to acquire Weener Plastics Holdings B.V., a leading producer of differentiated dispensing solutions for personal care, food and healthcare products for an enterprise value of €838 million. Weener operates a global network of 19 facilities predominantly in Europe and the Americas, with approximately 4,000 employees and proprietary manufacturing technologies including significant clean room capabilities.

“The proposed acquisition of Weener represents the continuation of our strategy to expand our global Dispensing and Specialty Closures franchise and a clear example of the effectiveness of our disciplined capital allocation model to create value for our shareholders,” said Adam Greenlee, President and CEO. “The combination of Weener’s innovative product offering, advanced manufacturing technologies and efficient operating footprint, strong customer relationships and presence in growing consumer markets, including personal and health care, complements our existing dispensing business well. As with prior acquisitions in Dispensing and Specialty Closures, Weener has established its market position through innovation, cost leadership and an intense focus on partnering with their customers to meet demanding market requirements,” continued Mr. Greenlee. “As the Silgan portfolio continues to evolve, we believe we are well positioned to succeed in the market as the dispensing partner of choice by maintaining our relentless focus on being the best at what we do and meeting the unique needs of our customers,” concluded Mr. Greenlee.

For the twelve months ended May 31, 2024, Weener generated sales of approximately €450 million and adjusted EBITDA of €96 million. Silgan expects to realize operational cost synergies of approximately €20 million within 18 months following the closing of the proposed acquisition. These synergies are expected to be achieved through a combination of procurement savings, manufacturing efficiencies and other operational synergies. The acquisition is expected to be accretive to adjusted earnings per share in 2025.

The proposed acquisition is expected to close in the fourth quarter of 2024 and is subject to applicable regulatory approvals and certain other customary conditions. The purchase price for this proposed acquisition is subject to adjustments set forth in the purchase agreement. Silgan expects to fund the purchase price for this proposed acquisition with a combination of cash on hand and borrowings under its senior secured credit facility.

Wells Fargo and J.P. Morgan Securities LLC are serving as financial advisors to Silgan on this transaction.

Conference Call

Silgan Holdings Inc. will hold a conference call to discuss the proposed acquisition at 9:00 a.m. eastern time on Wednesday, July 24, 2024. The conference call audio will be webcast live, and the webcast, accompanying slide presentation and this press release can be accessed at www.silganholdings.com. Those who wish to participate in the conference call via teleconference from the U.S. and Canada should dial (888) 254-3590 and from outside the U.S. and Canada should dial (323) 994-2093. The confirmation code for the conference call is 1770906. The audio webcast can be accessed at www.silganholdings.com and will be available for 90 days thereafter for those who are unable to listen to the live call.

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Silgan is a leading supplier of sustainable rigid packaging solutions for the world's essential consumer goods products with annual net sales of approximately $6.0 billion in 2023. Silgan operates 105 manufacturing facilities in North and South America, Europe and Asia. The Company is a leading worldwide supplier of dispensing and specialty closures for fragrance and beauty, food, beverage, personal and health care, home care and lawn and garden products. The Company is also a leading supplier of metal containers in North America and Europe for pet and human food and general line products. In addition, the Company is a leading supplier of custom containers for shelf-stable food and personal care products in North America.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723759649/en/

Alexander Hutter

Vice President, Investor Relations

AHutter@silgan.com

203-406-3187

Source: Silgan Holdings Inc.

FAQ

What is the value of Silgan's acquisition of Weener Packaging?

Silgan Holdings Inc. (SLGN) has agreed to acquire Weener Plastics Holdings B.V. for an enterprise value of €838 million.

When is the Silgan-Weener acquisition expected to close?

The acquisition is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary conditions.

How much in synergies does Silgan expect from the Weener acquisition?

Silgan expects to realize operational cost synergies of approximately €20 million within 18 months following the closing of the proposed acquisition.

What were Weener Packaging's sales for the year ending May 31, 2024?

For the twelve months ended May 31, 2024, Weener generated sales of approximately €450 million.

How will the Weener acquisition impact Silgan's earnings?

The acquisition is expected to be accretive to Silgan's adjusted earnings per share in 2025.