FRANKFURT/NEW YORK Nov 15 (Reuters) - U.S. packaging companies Berry Plastics Group Inc and Silgan Holding Inc as well as German peer Gerresheimer are competing to buy the healthcare packaging unit of Rexam in a deal expected to fetch a little less than $1 billion, people familiar with the matter said.
Rexam, which is selling the healthcare unit to focus on its core business of making beverage cans, received second-round bids earlier this week from the industry rivals, the people said on Friday.
Private equity firms including Bain Capital LLC and KKR & Co LP also put in offers, two of the people said, requesting anonymity because details of the process are not public.
Rexam, Gerresheimer, Bain and KKR declined to comment, while Berry Plastics and Silgan did not immediately respond to requests for comment.
Rexam said in June that it would sell its healthcare business, which makes medical packaging and drug delivery devices such as bronchial inhalers and injection syringes and accounts for about 10 percent of group sales.
The company expects to announce a deal by year-end or early next year, Chief Executive Officer Graham Chipchase told Reuters on Thursday.
The healthcare unit was initially expected to fetch about 650 million pounds, or $1 billion, but some of the bidders are now valuing it at closer to 550 million pounds, or $885 million, the people said.
Gerresheimer had withdrawn from the auction race, but came back with an offer after Rexam signalled it would accept a lower valuation, two of the people said.
"It is a very heterogeneous business comprising a low-growth cash machine, a unit with a good product pipeline but in heavy need of investment and a turnaround case," a third source said.
A successful sale of the healthcare division would follow that of Rexam's underperforming personal care business in July last year, which makes packaging for cosmetics and toiletries, for $709 million in two parts.
Private equity firm Sun Capital Partners agreed to buy the cosmetics, toiletries and household care division for $459 million, while Silgan Holdings acquired the high-barrier food packaging business for $250 million.