Rexam Contemplates Purchase of Owens-Illinois Plastics - WSJ

The Wall Street Journal is reporting Owens-Illinois may sell its plastics divisions to Britain's Rexam PLC for upwards of $1.5 billion. The deal may close as soon as Monday according to the Journal, though there are still unresolved issues between the companies. Rexam responded to the Journal's article with a 'Statement regarding media speculation' which said, "An acquisition, if agreed, would only occur on conditions which meet Rexam's investment returns criteria and is likely to be funded from a combination of its Glass disposal proceeds, debt and an element of equity." Rexam, one of the world's largest can makers, has been acquiring plastics divisions globally in recent years. Owens-Illinois announced the division was up for sale in January; it reported revenue of $770 million last fiscal year, mainly on sales of pharmaceutical packaging. The company is refocusing on glass packaging (beer bottles, etc.) after reporting a $27.5 million loss last year on $7.5 billion in sales. Plastic makers' margins have suffered recently as a result of higher oil prices, an essential ingredient in the plastics making process. The deal would come on the heels of GE's $11.6 billion sale of its plastics unit last month to the Saudis.

Sources: Rexam Statement Regarding Media Speculation, Wall Street Journal, Reuters, AFX News, MarketWatch
Commentary: GE Sells Plastics Unit to Sabic for $11.6 Billion • GE's Plastics Division Sale To Fund Buybacks, Restructuring • O-I And The Cost Of Executive Shifts
Stocks/ETFs to watch: Rexam PLC (REXMY), Owens-Illinois, Inc. (OI). Competitors: Amcor Limited (AMCR), Silgan Holdings (SLGN), Crown Holdings (CCK)
Related: Wikipedia: Plastic

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