Packaging company, Silgan Holdings Inc. SLGN completed the previously announced acquisition of WestRock Company’s WRK dispensing systems business for $1.025 billion. The buyout will help boost the scope and breadth of Silgan’smarket leading Closure business.
In Jan 2017, Silgan entered into an agreement to acquire WestRock’s home, health and beauty business. The business has 13 manufacturing plants in North America, Europe, South America and Asia. The business generated sales of about $570 million in fiscal 2016.
Through the acquisition, Silgan will be able to offer highly engineered dispensing systems for food, beverage, health care, garden, home and beauty products to customers. It is expected to be accretive to Silgan’s earnings.
Silgan Holdings Inc. Price
Silgan Holdings Inc. Price | Silgan Holdings Inc. Quote
Silgan funded this acquisition through term and revolving loan borrowings under its senior secured credit facility, including an $800 million delayed draw term loan. Silgan is likely to update its earnings guidance for full-year 2017, on the back of this acquisition, during its first-quarter 2017 earnings release on Apr 26.
The company anticipates to realize operational cost synergies of $15 million from the buyout within 24 months, primarily through reductions in general and administrative expenses, procurement savings, and manufacturing efficiencies.
Notably, Silgan continues to enhance profitability through strategic acquisitions and footprint expansion. The company undertook several footprint optimization programs across all its businesses, targeted to improve efficiencies, reduce costs and fortify its competitive position in each of the markets.
Moreover, shares of Silgan outperformed the Zacks categorized Containers-Metal/Glass industry over the past one year. The stock gained 11.1%, more than the industry’s gain of 10.9%, over the same time frame.
Silgan currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the same space include Roper Technologies, Inc. ROP and Casella Waste Systems, Inc. CWST. Both the stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Roper Technologies has a positive average earnings surprise of 0.92% for the last four quarters, while Casella Waste generated an impressive positive average earnings surprise of 165.21% over the trailing four quarters.
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Silgan Holdings Inc. (SLGN): Free Stock Analysis Report
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