REXAM, the FTSE 100 packaging maker, has signed a deal to sell its closures business, which makes bottle lids, to US manufacturer Berry Plastics for $360m (£222m).
The deal was announced to markets yesterday following a report in City A.M. on Friday that Berry, owned by US private equity giant Apollo, had been in exclusive talks with Rexam for weeks and was poised to sign for the closures unit.
Berry paid cash for the business, which recorded a pre-tax loss of £177m. Rexam is believed to have made a loss on the assets, which it bought as part of a $1.83bn acquisition from Owens Illinois in 2007.
Nicholas Mockett, a partner at Moorgate Capital and specialist in the industry, said: “It’s unusual for a company like Rexam to sell a business so soon after the acquisition but its new chief executive has taken the decision following the impact of the recession on that particular business unit.”
Rexam, which was advised on the deal by Barclays Capital, said it now plans to “right-size” – that is, cut down – its plastic packaging operations.
Despite analysts broadly welcoming the deal, Rexam’s shares closed down 2.8 per cent.