LONDON/FRANKFURT Aug 13 Beverage can maker
Rexam has launched the sale of its healthcare packaging
business, which could fetch around 650 million pounds ($1
billion), four banking sources told Reuters.
Rexam said in June 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, as it focuses on its main business of
making beverage cans.
Teasers have been sent out to prospective buyers, with first
round bids likely due by end-September, said one of the sources,
who spoke on condition of anonymity. Potential bidders include
large private equity firms and strategic players.
A 650 million pound price tag would represent a multiple of
around eight times the division's earnings before interest, tax,
depreciation and amortisation (EBITDA), one of the sources said.
Analysts at Credit Suisse estimate the average enterprise
value (equity plus debt) to EBITDA multiple for the division's
peer group at 7.6 times, broadly in line with Rexam's.
In August, Rexam Healthcare reported 23 million pounds of
underlying profit before tax on sales of 224 million for the six
month period to end-June.
Strategic players such as Germany's Gerresheimer
and U.S.-based Berry Plastics could be interested in
the asset, the sources said.
Private equity firms including Cinven, BC Partners, Bain
Capital, Carlyle, Permira and One Equity Partners (OEP) could
also be interested in the carve out, long starved of so-called
'primary deals' which are attractive for the potential
Private equity firms buy companies, try to boost their
profitability by cutting costs or shaking up operations, and
then sell them on in the hope of making a return.
Two thirds of European private equity activity this year has
involved one buyout house selling a company it owns to another,
worrying investors that firms are just recycling deals among
themselves to trigger fees.
Faced with stiff competition from strategic players though,
private equity may struggle to stump up an attractive price, one
of the sources said.
Barclays is advising Rexam on the disposal.
On a call with analysts after earnings on Aug 2, CEO Graham
Chipchase said the asset was attracting lots of interest but a
deal would likely not be completed until early next year due to
anti-trust clearances and a likely works council process.
The sale of the healthcare division follows that of its
underperforming personal care business in July last year, which
makes packaging for cosmetics and toiletries for $709 million in
Private equity firm Sun Capital Partners agreed to buy the
cosmetics, toiletries and household care division for $459
million, while Silgan Holdings acquired its
high-barrier food packaging business for $250 million.
Rexam, Barclays, Gerresheimer, BC Partners, Permira, OEP,
Bain Capital declined to comment. Berry Plastics, Cinven and
Carlyle could not immediately be reached for comment.