U.S. Markets closed

Silgan (SLGN) Buys WestRock's Dispensing Systems Business

Zacks Equity Research

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.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Silgan Holdings Inc. (SLGN): Free Stock Analysis Report
 
Roper Technologies, Inc. (ROP): Free Stock Analysis Report
 
Westrock Company (WRK): Free Stock Analysis Report
 
Casella Waste Systems, Inc. (CWST): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research