Silgan and American Industrial to buy Trivium Packaging in $3.4 billion deal (updated)
UPDATE 3-Silgan and American Industrial to buy Trivium Packaging in $3.4 billion deal Adds graphic, executive comments in paragraph 4, analyst comments in paragraph 9, background in paragraphs 7 and 10, updates shares
By Shania S Thomas
Oct 19 (Reuters) - Silgan Holdings SLGN.N and private equity firm American Industrial Partners said on Monday they would buy Trivium Packaging in a $3.4 billion deal, as the US consumer goods packaging maker looks to expand its footprint in Europe.
Silgan, whose customers include Campbell CPB.O and Coca-Cola KO.N, makes metal cans and dispensing products such as lotion pumps. Netherlands-based Trivium makes recyclable packaging material and is currently owned by Ontario Teachers' Pension Plan and Ardagh Group SA.
The deal will combine Silgan's metal businesses with Trivium, creating a global metal packaging business valued at $7.3 billion, according to the companies.
"Trivium is much more focused and has a much larger presence in Europe. So you kind of get that geographic benefit of both, and as we think about our increasingly global customers, we think that's a great way to serve a global customer base," said Adam Greenlee, CEO of Silgan Holdings, on a call with analysts.
Silgan shares, which had fallen about 6% this year through Friday's close, were up about 9% in afternoon trading.
Higher raw material costs due to inflation and geopolitical tensions have been squeezing margins for packaging makers, some of which have turned to acquisitions and portfolio reshaping to boost profitability amid weak demand.
Earlier this month, International Paper IP.N said it was evaluating potential bids for its Europe, Middle East and Africa packaging business.
Under the Trivium deal, American Industrial Partners will invest about $1 billion for a 40% stake in the combined metal packaging business, while the partnership will generate about $2.3 billion in cash proceeds for Silgan, which will retain a 60% stake in the venture.
"This combination makes sense because it creates opportunities to take costs out of the business and improve margins without relying on a rebound in demand," eMarketer analyst Suzy Davidkhanian said.
The deal, which is expected to close in mid-2027, comes after Silgan signaled interest in taking over German medical packaging maker Gerresheimer in March. Gerresheimer rejected the takeover bid, Reuters reported in April.
(Reporting by Shania S Thomas in Bengaluru; Editing by Leroy Leo and Jonathan Ananda)