Owens-Illinois To Buy Vitro's Glass Container Business For $2.15 Bln. - Update

(RTTNews) - Owens-Illinois Inc (OI) on Wednesday agreed to buy Vitro S.A.B. de C.V.'s food and beverage glass container business for about $2.15 billion in cash, to help it tap the growing glass packaging market in Mexico.

The deal, expected to close within 12 months, is expected to be accretive to earnings per share in the first year upon closure. In the third year after close, the deal is expected to add about $0.50 to Owens' earnings per share and at least $100 million in free cash flow.

Owens-Illinois shares gained more than 7 percent in morning trade on the New York Stock Exchange, following the announcement.

The deal includes Vitro's five plants in Mexico and one in Bolivia, which together employ 4,700 people. The acquired business is expected to generate annual revenues of $945 million, and about $30 million in run-rate cost synergies by 2018. Vitro is the largest supplier of glass containers in Mexico.

Owens has secured committed financing from Deutsche Bank to fund the deal.

The deal comes as Owens, the world's largest maker of bottles for liquor products, seeks avenues for growth. In April, Owens reported a lower first-quarter profit, hurt by a 13 percent drop in sales. However, earnings topped Wall Street estimates.

OI is trading at $26.04, up $2.25 or 9.45%, on a volume of 4.3 million shares.