| FRANKFURT/NEW YORK
FRANKFURT/NEW YORK Nov 15 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
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
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
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Gerresheimer had withdrawn from the auction race, but came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.