The Canadian firm Consumers Packaging Inc. is spending US$ 208 million to boost its position in North America“s beer, soft drink, food and spirits bottle-making market through a US$ 392.5 million joi…
The Canadian firm Consumers Packaging Inc. is spending US$ 208 million to boost its position in North America“s beer, soft drink, food and spirits bottle-making market through a US$ 392.5 million joint bid with US firm Owens-Brockway Glass Container Inc. (a unit of Owens-Illinois) for Anchor Glass Container Corp., the ailing US subsidiary of Mexico“s Vitro. The deal consists of US$ 333.6 million in cash and US$ 58.9 million in convertible preferred and common equity of a newly-formed subsidiary of Consumers. The company, which currently owns seven plants in Canada, says it will more than double its sales (US$ 459 million for the 12 months to 30 September) to US$ 1 billion with the purchase of most of the assets of Anchor Glass (which has annual sales of US$ 820 million and 13 plants). Anchor filed for Chapter 11 bankruptcy protection in September. The acquisition must be approved by a Delaware bankruptcy court and receive US regulatory approvals before it can be finalised. Anchor had tentatively accepted a US$ 365 million cash bid from a unit of Cie de Saint-Gobain in October. However, Anchor“s board then announced that it now supports the better offer made by Consumers and Owens-Brockway Glass Container Inc. of Toledo, Ohio, US. In October, Owens-Brockway launched a suit to block the sale to the Saint-Gobain unit, alleging that Anchor“s assets embodied trade secrets and proprietary information provided to Anchor by Owens-Brockway. The suit is expected to be dropped if the deal receives the necessary approvals. In the deal, which should be concluded by the end of January 1997, Consumers Packaging will get 11 plants in the United States, together with contracts with Anheuser-Busch Cos. Inc., Bacardi, and food and soft drink producers. Owens-Brockway will pay US$ 125 million in cash for Anchor“s two California plants, including contracts with Coors Brewing Co., and will also take on some unspecified liabilities. In its statement on the transacition, Owens-Illinois said it also agreed to provide its glass container manufacturing technology to Consumers Packaging operations in the United States and Canada, including those being purchased from Anchor, subject to reaching an agreement with Consumers. Gary Walters, general counsel at Consumers, said his company may close some of its new US plants to consolidate operations in an industry with oversupply. The glass container industry in North America is currently suffering something of a price war caused by excessive manufacturing capacity and limited demand. Large-scale operations are responding by buying out competitors.