Crown Holdings, Inc.
) has entered into an agreement to acquire Dutch brewer Heineken's
Mexican packaging business, EMPAQUE for $1.225 billion. The
acquisition will help Crown to expand its presence in the growing
Mexican market and to fortify its global beverage packaging
business, and is expected to contribute between 15 cents to 20
cents per share to Crown's 2015 earnings before synergies, but
including estimated amortization and depreciation for purchase
EMPAQUE is a leading Mexican manufacturer of aluminum cans and
ends, bottle caps and glass bottles for the beverage industry. The
acquisition is expected to close by the end of this year pursuant
to customary closing conditions, including competition authority
EMPAQUE, which has a total workforce of 1,500 people, operates two
beverage can plants, a plant that manufacturers beverage can ends,
aluminum closures and bottle caps, a glass bottle plant and a glass
service facility in Mexico. EMPAQUE has projected revenues of $700
million and EBITDA of approximately $150 million in 2014.
The acquisition of EMPAQUE will significantly enhance Crown's
strategic position in beverage cans, both in the domestic as well
as international markets. With an annual supply of over 24 billion
units to beer and soft drink customers, Crown will be catapulted to
the position of the second largest beverage can producer in North
America. Globally, Crown will produce more than 62 billion
beverage cans, accounting for 20% of the total beverage cans.
With this acquisition, Crown will also strengthen its
industry-leading geographic presence, as over 50% of beverage can
revenue will stem from the faster growing developing regions.
In addition, Crown Holdings will benefit from its previous Mivisa
acquisition, which will considerably improve Crown Holdings
position in the European food can segment. The buyout will boost
margins and is expected to be accretive to earnings in 2014.
Moreover, Crown Holdings has embarked on a cost-reduction
initiative to better align costs primarily in its food, aerosol and
specialty packaging businesses, as a result of which approximately
235 employees will be laid off, in 2014. This will lead to an
annual cost savings of approximately $25 million.
Philadelphia-based Crown is a leading supplier of packaging
products to consumer marketing companies. The company manufactures
aluminum beverage cans, food cans, aerosol cans and other packaging
Crown Holdings currently holds a Zacks Rank #3 (Hold). Some better
stocks worth considering in the sector include Sealed Air
), Ball Corporation (
) and, Graphic Packaging Holding Company (
). While Sealed Air holds a Zacks Rank #1 (Strong Buy), Ball
Corporation and Graphic Packaging hold a Zacks Rank #2 (Buy).
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