US-based Owens-Illinois (O-I) said that it is in serious talk with the company's owner, Glasspack Participations, which is controlled by investment funds advised by CVC Capital Partners Europe.
O-I said that total consideration for the acquisition would be approximately €1,160 million in cash and that the deal would also include the assumption of outstanding debts. The parties said that they expect to reach an agreement shortly.
BSN, which has 6,400 employers in 19 plants across Europe, has initiated consultations with the appropriate employee works councils in accordance with labour laws. The acquisition would be subject to regulatory approval, with the closing expected in the second quarter of 2004, providing all the requirements are fulfilled.
BSN currently owns and operates 19 plants located in France, Germany, the Netherlands and Spain, principally serving the wine and spirits, other beverages sectors which mainly include beer, and speciality food industries.
Thomas Young, O-I interim co-chief executive officer and chief financial officer, said: "By combining BSN with our existing European operations, we would create Europe's largest glass container company, augmenting our existing number one positions in North America, South America and Australia. This acquisition would be a meaningful step in our strategy to focus on the competitive strengths of our global glass container businesses."
In 2003 BSN reported preliminary unaudited net sales of approximately €1,270 million and recurring EBITDA of approximately €201 million. Based on these results, O-I believes that the BSN acquisition would increase its worldwide glass container sales by approximately 38 per cent. The company also expects the transaction to be accretive to earnings and cash flow in the first year, before synergies.
Terry Wilkison, interim co-chief executive officer of the company, said: "BSN is a well-run company with strong management, excellent production facilities, a history of high-quality manufacturing and a strong customer base across Europe. Having licensed O-I technology since 1957, BSN would be an ideal addition to the O-I family." O-I has stated its belief that the acquisition will expands its global glass franchise, add to the European customer base and provide manufacturing facilities that will extend its global cost savings initiatives.
Regarding the company's goals of increased cash flow and debt reduction, Young said: "While the acquisition of BSN would increase O-I's total debt in the short run, we believe that the company's improvement initiatives for its core businesses combined with the cash flow and earnings accretion from this acquisition should reduce indebtedness over time.
"Also, as previously announced, the company has retained advisors to conduct a strategic review of our blow-moulded plastics operations. One possible outcome of this strategic review could be a decision to sell blow-moulded plastics, which would provide another means to reduce indebtedness."
Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. The company reported net sales of US $6.0 billion for the year ended 31 December 2003.