British packaging group Rexam Plc and private equity firm Cinven have bid for Gerresheimer Glas AG, which is majority controlled by Germany“s Viag AG, industry sources have said.
One source said tha…
British packaging group Rexam Plc and private equity firm Cinven have bid for Gerresheimer Glas AG, which is majority controlled by Germany“s Viag AG, industry sources have said. One source said that Rexam is also preparing a bid for Schmalbach-Lubeca , which is 60% owned by Viag. Sources said that management of Viag – currently going through its merger process with Veba – is inclined to sell these units as soon as possible and are even inclined to do a joint deal. Gerresheimer has already been officially put up for sale and sources say Viag“s management wants to sell Schmalbach within the first half. Apart from Rexam and Cinven, the private equity arm of Chase Manhattan bank and another private equity firm Doughty Hanson are also understood to be in the fray for Gerresheimer Glas. One source familiar with proceedings said Rexam was “a strong favourite” and had an edge over other bidders because of its experience in the sector and its involvement in the German glass industry. “They want to get it done fast, and they know both businesses would fit well with Rexam,” one source said. Some analysts have valued Gerresheimer at around Euros 400 million and another 600 million for Schmalbach-Lubeca. Last year Rolf Borjesson, Rexam“s chief executive had said it was looking at further expansion into Europe and was willing to spend up to US$ 1 billion. Gerrresheimer specializes in glass tube bottles for the pharmaceutical and perfume industry, items which are difficult to replicate in plastic and therefore have high margins. In this segment Rexam has a six to 7% market share in Europe and has been looking to expand. Schmalbach-Lubeca would propel Rexam into the number one position in Europe“s beverage can market – from the current number three – with a 47% market share. The European beverage can market, both aluminium and steel, is valued at around US$ 2.8 billion. One source close to Rexam said that Rexam was aware of the competition problems it could face in Germany if it bid for Schmalbach and it was willing to shed some of its own existing businesses in Germany. If Rexam succeeds in these two acquisitions it would accelerate its ambitions to become a global leader in the packaging industry. Last year Rexam bought PLM, the Swedish bottle and can maker, and analysts say Borjesson has succeeded in achieving the necessary synergies. Rexam has a proforma gearing level of about 90%.