Owens-Illinois To Buy Vitro's Food And Beverage Glass Business For $2.15 Bln

(RTTNews) - Owens-Illinois Inc. (OI) said that it agreed to acquire Vitro, S.A.B. de C.V.'s food and beverage glass container business in an all-cash transaction valued at approximately $2.15 billion.

Vitro is the largest supplier of glass containers in Mexico. The transaction, which has been approved by the boards of directors of both companies, is subject to approval by Vitro's shareholders and customary regulatory approvals. The deal is expected to close within 12 months.

The agreement includes Vitro's five plants in Mexico and one in Bolivia, which together employ 4,700 people. The current leadership of Vitro's food and beverage glass container business will remain in place following the transaction close.

The acquired business is expected to generate estimated annual revenue of $945 million and adjusted EBITDA of $278 million. Further, O-I expects to realize approximately $30 million in run-rate cost synergies by 2018 through a combination of procurement savings and operating efficiencies. The transaction is expected to be accretive to cash flow and earnings per share in the first year after closing.

"Vitro's leading position, long-term customer relationships and proven record of innovation and new product development will enable us to capitalize on commercial opportunities in Mexico. In the third year after close, this compelling transaction is expected to add approximately $0.50 to our earnings per share and at least $100 million in free cash flow, positioning us to drive even greater value for shareholders," said Al Stroucken, chairman and CEO of Owens-Illinois.

OI is currently trading at $26.03, up $2.24 or 9.42%.