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Crown Holdings, Inc. CCK has entered into an agreement to divest its European Tinplate business to KPS Capital Partners, LP for €1.9 billion ($2.3 billion), while retaining 20% shareholding interest in the business. Crown Holdings expects to utilize net proceeds of the deal in reducing debt, funding capital projects as well as making share repurchases.
Tinplate is the largest manufacturer of steel and aluminum food packaging business in Europe and operates 44 manufacturing plants across 17 countries in Europe, the Middle East and Africa (EMEA). These plants produce food cans, aerosol cans, metal closures and promotional packaging for several consumer brands. The business generated €1.9 billion ($2.3 billion) revenues in 2020, with EBITDA of €220 million ($269 million).
Crown Holdings’ European Tinplate business offers innovative metal packaging to European customers for protection and preservation of premium products. In fact, its infinitely recyclable food can offer the highest sustainability, which helps eliminate food waste of more than one billion liters a year.
Management assumes that if entire net proceeds of the deal are utilized in debt reduction, Crown Holdings’ estimated pro forma adjusted net leverage ratio at the end of 2021 would be 2.9x compared with the 3.9x recorded at the end of 2020. The divesture of the European Tinplate business is likely to close during the third quarter this year.
Crown holdings is benefiting from surge in global beverage can demand trend as consumers are preferring cans over other packaging formats owing to its many inherent benefits, including being infinitely recyclable. Thus, the company continues to implement several beverage-can capacity-expansion projects. Further, strategic acquisitions in geographic areas and product lines will continue to aid the company in tapping this demand.
The stock has gained 64% over the past year, outperforming the industry’s growth of 35.6%.
Zacks Rank & Other Stocks to Consider
Crown holdings currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Industrial Products sector are Deere & Co. DE, AGCO Corp. AGCO and Applied Industrial Technologies, Inc. AIT, each carrying a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Deere has a projected earnings growth rate of 82.5% for fiscal 2021. Over the past year, the company’s shares have soared 133.2%.
AGCO has an estimated earnings growth rate of 29.9% for the ongoing year. The company’s shares have surged 134.1% in the past year.
Applied Industrial has an expected earnings growth rate of 0.8% for fiscal 2021. The stock has appreciated 78.5% in a year’s time.
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