O-I Acquires Brazilian Glass Company
CIV is a leading glass container producer in northeastern Brazil, one of the country's fastest-growing regions. The acquisition includes two plants in the state of Pernambuco and one in the state of Ceara, and boosts O-I's capacity in Brazil by approximately 50%. The plants employ approximately 1300 people and produce glass containers for the beverage, food, and pharmaceutical industries, as well as tableware.
Under the terms of the agreement, O-I is purchasing CIV's glass container business for $603 million, which includes future tax benefits with an estimated present value of $140 million. These tax benefits include federal and state incentives for development in Brazil's northeastern region. The all-cash transaction closed today.
In the first full year of operation, O-I expects the acquisition will boost regional net sales by approximately $200 million. The return on investment is expected to exceed O-I's cost of capital. The purchase price reflects a 5.8 times EBITDA multiple for the first year of operation, excluding the present value of future tax benefits and including estimated net cost savings.
"The acquisition of this well-managed company in South America-our fastest-growing and most profitable region-directly supports our strategy of expanding our presence in emerging markets with robust earnings growth potential," said Al Stroucken, O-I chairman and CEO. "Our recent expansions in Argentina, China, Malaysia and Vietnam, as well as the opening of new furnaces in Peru and New Zealand, clearly demonstrate our commitment to these rapidly growing regions and the opportunities they offer."
For more information, visit www.o-i.com.