Silgan (SLGN) Invests $274 Million in Easytech & Unicep Buyouts

Silgan Holdings Inc. SLGN recently closed the Easytech and Unicep acquisitions for a total consideration of $273.5 million. These buyouts will help the company generate attractive cash returns in the near term. Silgan is focused on deploying capital to expand its business and reduce operating costs, while increasing shareholders’ return.

The Easytech acquisition will help Silgan efficiently utilize its existing capacity for metal ends. Easytech manufactures and sells easy-open and sanitary metal ends for food applications in the European markets. Silgan expects to realize annual synergies of $4.9 million from this acquisition within one year.

The Unicep buyout expands Silgan’s precision dosing capabilities, and extends the range of its comprehensive product offering into the new and existing markets. The Unicep business magnifies Silgan’s exposure to the health care and the Point-of-Care diagnostics markets, and complements its global Dispensing and Specialty Closures franchise. Unicep develops, manufactures and sells precision dosing dispensing packaging solutions for a variety of consumer and professional products. Silgan anticipates to realize tax benefits having a net present value of approximately $35 million from this buyout. Both of these acquisitions are anticipated to provide a slight lift to Silgan’s earnings this year, and be accretive to the same next year.

Silgan is focused on investments in several capacity-expansion projects for dispensing triggers and pumps, which will aid it to tap the significant growth in demand for the health and hygiene products. In line with that, last month, Silgan acquired Gateway Plastics to expand its wide range of product offerings in the Dispensing and Specialty Closures business. Also, last June, Silgan acquired Albea’s dispensing business to strengthen its position in the dispensing markets. The ongoing recovery in the beverage, beauty and fragrance markets will likely aid Silgan’s Dispensing and Specialty Closures segment.

Meanwhile, Silgan and some other prominent players in the Industrial Products sector like Ball Corporation BLL, Crown Holdings, Inc. CCK and Sealed Air Corporation SEE are bearing the brunt of higher raw material costs and labor supply-related challenges. Therefore, these companies are implementing cost-reduction actions to offset such impacts.

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