Rexam eyeing Owens-Illinois plastics unit

LONDON (Reuters) - Britain's Rexam Plc (REX.L), the world's biggest can maker, said on Friday it was in talks about buying the plastics division of U.S. packaging company Owens-Illinois Inc (OI.N).

"An acquisition, if agreed, would only occur on conditions which meet Rexam's investment returns criteria and is likely to be funded from a combination of its Glass disposal proceeds, debt and an element of equity," Rexam said in a statement.

On January 12, Owens-Illinois, which had previously indicated it might sell its plastics packaging business, said it had hired Goldman Sachs to review strategic options for the unit including a possible sale.

The U.S. maker of packaging products and glass containers said O-I Plastics had revenue of about $770 million for the 12 months ended September 30, 2006.

Wachovia Securities analyst Ghansham Panjabi said at the time the unit could fetch between $1.6 billion to $1.8 billion.

Rexam shares were down 0.9 percent at 521.5 pence in early trading, with the FTSE 100 index down 0.7 percent.