The $1.025 billion deal (subject to adjustments outlined in the purchase agreement) sees the packaging player's dispensing division now come under the roof of Silgan, bolstering the company’s capacity to supply to the beauty and personal care industry.
Comments on the deal
“This business [WestRock] is a leading global supplier of highly engineered triggers, pumps, sprayers and dispensing closure solutions to major branded consumer goods product companies in the home, health and beauty markets,” Silgan asserted in a statement.
“With this acquisition, Silgan expects to realize operational cost synergies of $15 million within 24 months, primarily through reductions in general and administrative expenses, procurement savings and manufacturing efficiencies.
“As a result, this acquisition will become more accretive as synergies are phased in over the next 24 months. Silgan will update its earnings guidance for the full year 2017 for this acquisition and its recent debt financing transactions when it announces its earnings results for the first quarter of 2017 on April 26, 2017.”
Details of the deal
WestRock's division, according to Silgan, generated sales of approximately $570 million in 2016, and boasts 13 plants across North America, Europe, South America and Asia.
Silgan says it funded the purchase price for this acquisition through term and revolving loan borrowings under its senior secured credit facility, including a $800 million delayed draw term loan.
The packaging player says the acquisition is expected to be accretive to its earnings, excluding the impact of the required purchase accounting adjustments.
WestRock's dispensing division now becomes part of Silgan, which is a leading supplier of rigid packaging for consumer goods products and boasts an annual net sales of approximately £3.6 billion (2016). It operates 100 manufacturing facilities in North and South America, Europe and Asia.
Correction: In the daily newsletter, the company Silgan was mistakenly referred to as Silab.