Rexam to sell personal care business
Rexam has announced the proposed sale of its personal care business for $709 million (£452m) to Sun Capital and Silgan.
The business is being sold in two parts: the cosmetics, toiletries and household care products business (CTH) and the high barrier food packaging business (HBF). An affiliate of Sun Capital Partners, a private equity firm, has made a binding offer for CTH for a total of $459m in cash, subject to consultation with various European works councils.
A subsidiary of Silgan Holdings, a leading US based supplier of packaging for consumer goods products, has agreed to acquire HBF for $250m in cash. Both transactions are subject to certain adjustments at completion.
The transactions are expected to complete in the third quarter for HBF and in the fourth for CTH. Both are conditional on certain regulatory approvals.
In total, the personal care business employs some 7,000 people in Europe, the US and Asia. In 2011, the business had sales of £502m and underlying operating profit of £38m before central overheads (CTH: £26m and HBF: £12m). As at 31 December 2011, it had gross assets of £650m (CTH: £611m and HBF: £39m) and liabilities of £112m (CTH: £103m and HBF: £9m).
As a result of the sale, Rexam will carry out a restructuring programme to remove residual overheads which, together with certain separation costs, will give rise to an exceptional charge of some £40m in 2012, of which £25m will be cash costs. Ongoing, there will be £7m of annual retained fixed costs which will be absorbed by the beverage cans and healthcare businesses.
Following completion, Rexam plans to return around £370m (at current exchange rates) to shareholders.
