Vitro to go ahead with Monterrey expansion

O-I speaks out about its $2.15bn Vitro F&B glass container acquisition

17-May-2015 - Last updated on 15-May-2015 at 12:44 GMT

Owens-Illinois (OI) has reached a definitive agreement to acquire Vitro, the largest supplier of glass containers in Mexico, expected to close within 12 months.

Vitro’s food and beverage glass container business is worth approximately $2.15bn.

Five plants in Mexico and one in Bolivia

The agreement includes five plants in Mexico and one in Bolivia, employing 4,700 people and gives O-I a competitive position in the growing glass segment of the packaging market in Mexico.

Lisa Babington, director, Global Corporate Communications, O-I, told FoodProductionDaily, the focus now is on optimizing its asset base and after the deal closes with Vitro Food & Beverage, bringing them into the O-I family.

“The food and beverage market in Mexico has been growing steadily. Key drivers include a growing GDP per capita and the expansion of the middle class,” she said.

“Mexico is the fourth-largest beer producer in the world. The wine, spirits, and ready-to-drink market is expected to grow at an annual rate of 4% to 5% in the coming years.

“It is also a market where our multinational customers are expanding to so this enables us to serve them better.

“Our business strategy has been to remain open to opportunistic M&A that fit a strategic positioning for us and are available at a favorable price.”

EBITDA of $278m

The acquired business is expected to generate estimated annual revenue of $945m and adjusted EBITDA of $278m.

The current leadership of Vitro’s food and beverage glass container business will remain in place following the transaction close.

O-I expects to realize approximately $30m in run-rate cost synergies by 2018 through procurement savings and operating efficiencies. The transaction is expected to be accretive to cash flow and earnings per share in the first year after closing.

“The business aligns with our market strategy and fits well into our global footprint,” added Babington.

“Vitro brings highly productive manufacturing operations, a great management team, and engaged employees.

“Its food and beverage glass business provides access to a geography in which we have not been represented and which we have long viewed as strategic.

"Our intent is for the Mexican operations to continue running as they have been with the same leadership team in place. Vitro is in the process of expanding the plant in Monterrey and that project will continue as planned.”