Markets

Silgan to Buy WestRock's Home, Health & Beauty Business

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Silgan Holdings Inc.SLGN has agreed to acquire WestRock Company's WRK specialty closures and dispensing systems business that will help boost the scope and breadth of its market leading closure business. Per the deal, Silgan will pay $1.025 billion in cash and will assume about $25 million in foreign pension liability.

WestRock's home, health and beauty business has 13 manufacturing plants in North America, Europe, South America and Asia. The business had generated sales of about $566 million in the 12-month period ended Sep 30, 2016.

This transaction is subject to customary conditions and regulatory approvals and is likely to close by the end of Mar 2017. Silgan expects to initially fund the acquisition from a combination of cash and borrowings. The buyout is anticipated to be accretive to earnings, excluding the impact of the required purchase accounting adjustments. It will also be significantly accretive to free cash flow per share in 2017. The transaction will become more accretive as synergies are phased in over the next 24 months following its closure.

Silgan Holdings Inc. Price

Silgan Holdings Inc. Price | Silgan Holdings Inc. Quote

Following the buyout, Silgan will be able to offer highly engineered dispensing systems for food, beverage, health care, garden, home and beauty products to customers. The deal will also aid the company trim costs by $15 million within two years of making the purchase through manufacturing efficiencies, procurement savings and reductions in general and administrative expenses.

Notably, Silgan continues to bolster its profitability through strategic acquisitions and by growing footprint. The company's acquisition of the metal container manufacturing assets of Van Can in 2014 expanded and diversified the customer base, geographic presence and product lines of its metal container business in the U.S. Further acquisitions are also likely to drive the company's growth.

Shares of Silgan outperformed the Zacks categorized Containers-Metal/Glass industry over the past one month. The stock gained 9.6%, more than the industry's gain of 6.8%, over the same time frame.

Zacks Rank & Stocks to Consider

Currently, Silgan carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector include ABB Ltd ABB and Altra Industrial Motion Corp. AIMC .

ABB Ltd has an impressive track record of earnings surprise, with an average positive earnings surprise of 23.50% for the last four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Altra Industrial Motion also boasts a Zacks Rank #1 and has an average earnings surprise of 8.06% for the trailing four quarters.

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Silgan Holdings Inc. (SLGN): Free Stock Analysis Report

ABB Ltd (ABB): Free Stock Analysis Report

Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report

Westrock Company (WRK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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