US glass packaging firm Owens-Illinois (O-I) has agreed to acquire Mexico-based Vitro's food and beverage glass container business for $2.15bn.
Both the companies have signed a definitive agreement to this effect.
The acquisition covers Vitro's five plants in Mexico and one in Bolivia where Vitro employs 4,700 people in total.
With this investment, O-I will be positioned in the growing glass segment of the packaging market in Mexico.
O-I chairman and CEO Al Stroucken said: "We have long admired Vitro's business, and this transaction marks an important strategic step for O-I in that it allows us to establish a strong position in the attractive glass container segment in Mexico.
"Vitro's leading position, long-term customer relationships and proven record of innovation and new product development will enable us to capitalise on commercial opportunities in Mexico.
"In the third year after close, this compelling transaction is expected to add approximately $0.50 to our earnings per share and at least $100 million in free cash flow, positioning us to drive even greater value for shareholders."
Subject to Vitro's shareholders and customary regulatory approvals, the transaction is expected to be completed within one year.
Upon completion of the acquisition, Vitro's food and beverage glass container business is anticipated to generate approximately $945m in annual revenues and $278m in adjusted EBITDA.
O-I has secured financing from Deutsche Bank to fund the transaction.
With around 21,100 employees, O-I currently has 75 plants in 21 countries worldwide. The company offers glass container products to its customers across 86 countries.
Image: With this investment, O-I will be positioned in the growing glass segment of the packaging market in Mexico. Photo: courtesy of Paul via freedigitalphotos.