The acquisition is expected to expand Silgan’s product offering in Dispensing and Speciality Closures
Sustainable rigid packaging solutions provider Silgan Holdings has acquired US-based Gateway Plastics in a deal valued at up to $485m.
The purchase price for the acquisition is subject to customary adjustments, including net debt and working capital.
Gateway Plastics is engaged in the manufacturing and marketing of dispensing closures and integrated dispensing packaging solutions.
The company produces products such as combined container and closure or 100% recyclable dispensing beverage pods, which can be used by consumer goods product companies in food and beverage applications.
Gateway operates an advanced manufacturing facility in Mequon of Wisconsin. The company is expected to generate up to $150m in sales and around $46m in adjusted EBITDA this year.
Silgan Holdings president and CEO Adam Greenlee said: “Gateway has existing capacity for growth as it is very well capitalized with state-of-the-art equipment and market-leading capabilities and, like Silgan, maintains a relentless focus on meeting the unique needs of its customers.
“This acquisition further expands our comprehensive product offering in Dispensing and Speciality Closures and provides further growth opportunities with many of our existing and shared customers.
“In addition, we believe Gateway’s advanced automation platform can be leveraged across much of Silgan’s manufacturing footprint.”
The acquisition is believed to help Silgan to realise tax benefits with a net present value of around $90m due to the step-up in tax basis of the assets from the deal.
Silgan financed the purchase price for the deal with revolving loan borrowings under its senior secured credit facility.
The company said that the deal is expected to be slightly accretive to its earnings in 2021, excluding the impact of required purchase accounting adjustments, with additional accretion expected next year.
With 110 manufacturing facilities in North and South America, Silgan supplies dispensing and speciality closures for food, beverage, health care, garden, home, personal care and beauty products.
In June last year, Silgan completed the acquisition of the dispensing business of packaging company Albéa in a deal worth $900m.