Packaging Closures Business Flips to U.K. Firm

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Owens-Illinois Inc. (O-I) last week announced it will sell its plastics packaging business – including closures for containers used for automotive liquids such as motor oils, fuel additives and anti-freeze solutions – to consumer packaging company Rexam PLC for $1.8 billion, to be paid in cash at closing.

The sale includes all of O-I Plastics, which includes health-care containers, prescription products and the entire line of closures and specialty products as well, O-I spokeswoman Kelley Yoder told Lube Report. We thought that Rexam and their line of business, their focusing on plastics as well would be a good fit. It was a private bidding process, and we cant disclose if there were other bidders.

Perrysburg, Ohio-based O-I Plastics has 2,800 employees in 19 plants in the United States (including Puerto Rico), Mexico, Brazil, Hungary, Singapore and Malaysia with a headquarters and technical development center in Perrysburg. Four of its manufacturing plants in North America produce enclosures for the automotive market, according to Yoder.

Jonathan Thornton, Rexams group communications director, told Lube Report it was too early for Rexam officials to comment on its plans for O-Is plants and employees. We are still awaiting regulatory clearance on the deal in a number of countries, the USA included, Thornton said.

O-I Plastics provides health-care packaging and specialty closure systems in the United States. It designs, manufactures and sells plastic packaging solutions for an array of industries, and its products include lined and linerless tamper evident closures for use with HDPE bottles and motor oil.

One of the many attractions of O-I was the potential for Rexam to expand its presence and gain market-leading positions in plastic packaging in health care and closures, Thornton said. Equally, it was to use Rexams international presence to globalize O-Is product offering, which is largely U.S.-focused.

For the 12 months ending Dec. 31, 2006, O-I Plastics posted net sales of $771.6 million and a $114.5 million operating profit.

Approved by the board of directors of each company, the transaction is expected to close early in the third quarter, subject to regulatory approvals and Rexam shareholder approval.

London-based Rexam employs about 24,200 people in more than 20 countries. In 2006, including its glass business, it recorded sales of 3.6 billion (U.S. $4.8 billion). In March 2007, Rexam announced it would sell its glass business for 660 million (U.S. $885 million) in a deal that is going through the regulatory approval process.

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