* Sale to Montagu Private Equity for $805 mln in cash
* To focus solely on beverage can making business
* To return 450 mln stg cash to shareholders
* Shares up 1.7 pct at 501.5 pence
By Esha Vaish
Feb 3 Speciality packaging maker Rexam
said it would sell the bulk of its healthcare business to
Montagu Private Equity for $805 million in cash, seven months
after it put the unit on the block to focus solely on making
The company's beverage cans business, which accounted for
about 90 percent of sales last year, is expected to benefit from
a spurt in demand ahead of the Soccer World Cup in Brazil this
year and the Olympics in 2016.
Rexam is still looking for a buyer for its closures and
containers unit - the part of its healthcare business that makes
plastic bottles for over-the-counter medicine. ()
Even after the sale of the remaining unit, Rexam would fall
short of analysts' expected target of $1 billion from the sale
of the entire healthcare business, Macquarie Research analyst Al
Kabili told Reuters.
"That's the least attractive business, like the lowest
margin of the healthcare assets, so that's going to fetch the
lowest price," Kabili said.
Jefferies & Co analyst Sandy Morris told Reuters that
trading had been challenging in the closures and containers unit
for the last four years. He estimated the unit would fetch about
50-70 million pounds ($82-$115 million).
Reuters reported in January that Montagu was in talks to buy
Rexam's pharmaceutical devices and prescription retail packaging
units, which make medical packaging and drug delivery devices
such as bronchial inhalers and injection syringes.
The healthcare business was also pursued by German medical
supplier Gerresheimer, U.S. packagers Berry Plastics
Group Inc and Silgan Holding Inc, and private
equity firms Bain Capital LLC and KKR & Co LP.
Rexam on Monday said it said it intended to return about 450
million pounds from the proceeds of the sale to shareholders.
The sale, expected to close around the middle of the year,
leaves Rexam to focus on its business of making cans for
companies including Coca-Cola Co, PepsiCo Inc and
Rexam said it would focus on growing sales in emerging
markets, which accounted for about a third of revenue in 2012.
The London-listed company said it expects strong sales from
countries such as Brazil and India this year.
The company's stock was trading up about 1.7 percent at
501.5 pence at 1457 GMT. The stock has risen almost 5 percent
since Rexam announced plans to sell the healthcare business.
The loan financing on the deal is expected to total around
$600 million, sources told Reuters Loan Pricing Corporation on
Credit Suisse and Morgan Stanley are leading the deal with
Credit Suisse coordinating senior loan facilities and Morgan
Stanley co-ordinating second lien facilities, according to RLPC.
Rexam said Barclays was its financial adviser.