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UPDATE: Oct. 15, 2024: Silgan Holdings announced Tuesday it completed its acquisition of Weener Plastics Holdings, a deal first announced in July. The company funded the deal “through term and revolving loan borrowings under its senior secured credit facility, including a €700 million incremental term loan.”

Dive Brief:

• July 24: Silgan Holdings plans to acquire Weener Plastics Holdings, a global company headquartered in the Netherlands, for 838 million euros (which would equate to approximately $910 million based on July 24 exchange rates).
• Silgan said Weener will bolster its dispensing solutions business, with high-growth products serving personal care, food and healthcare customers. Weener’s notable product strengths include roll-on ball technology, aerosol actuation and nasal dispensing products, according to Silgan executives.
• The acquisition is expected to close in the fourth quarter. Silgan anticipates about 20 million euros worth of operational cost synergies, including from manufacturing efficiencies and procurement savings, to be realized within 18 months. 

Dive Insight:

During a conference call Wednesday about the transaction, CEO Adam Greenlee called Weener “a very logical addition” and said it has “all the hallmarks we look for in a franchise business,” including strong margins, demonstrated organic growth and long-term customer relationships. 

“We've always said when we have the right opportunity at the right time, and it’s the right fit for Silgan, we're going to execute that strategy. And I think this is just another example of that,” he said.

Weener has 19 facilities, predominantly across Europe and the Americas, including in the U.S. and Mexico, but also has sites in Asia and Africa. Its annual sales for the year ended May 31 were 450 million euros; Silgan’s dispensing and specialty closures division did $2.2 billion in sales in 2023.

Weener has approximately 4,000 employees versus Silgan’s nearly 15,000. Silgan management did not explicitly answer analysts’ questions about whether Weener management would be kept in place, but Greenlee said “we're excited to work with all of them.”

Silgan said Weener’s material procurement is similar to its own, largely focused on polypropylene and polyethylene. When the acquisition is complete, the end market breakdown for the business’ products would be 36% in personal care and beauty, 23% in food and 21% in beverage; with healthcare and home care, lawn and garden also contributing.

Silgan is funding the purchase with a mix of cash on hand and borrowings under its senior secured credit facility. Following its first quarter, Silgan estimated free cash flow for the year would be $375 million.

Sales in the dispensing and specialty closures segment declined 8% year over year in the first quarter, which Silgan attributed to customer destocking activities in domestic food and beverage markets.

Adjusted earnings before interest, taxes, depreciation and amortization for the dispensing business as part of Silgan overall are expected to grow from 21% in 2013 to 55% after the acquisition.

Dispensing and specialty closures represent Silgan’s second-largest business behind metal containers, like food and pet food cans, and ahead of custom containers. In the food can space, competitor Sonoco is in the process of acquiring European metal containers business Eviosys for $3.9 billion.

Looking ahead, “given the market backdrop, it plays very well for us to continue to look at opportunities such as this to continue to build out parts of the portfolio,” said Greenlee. “We'll continue to look for opportunities in this segment itself.”

Ahead of next week’s second-quarter earnings call on July 31, Greenlee acknowledged the market remains challenging.

“I'd love to tell you that the packaging world is great and everything’s rosy on the outlook going forward. I'm not quite sure we're there yet,” he said.