Silgan acquires Gateway
Silgan Holdings has announced that it has acquired Gateway Plastics.
This business manufactures and sells dispensing closures and integrated dispensing packaging solutions, such as a combined container and closure or 100% recyclable dispensing beverage pods, to consumer goods product companies primarily for the food and beverage markets. It operates a large, state-of-the-art manufacturing facility in Mequon, Wisconsin and is projected to generate approximately $150 million in sales and approximately $46 million in adjusted EBITDA for 2021.
“The acquisition of Gateway is the most recent example of Silgan deploying our disciplined capital allocation model to create shareholder value. We are excited to add the Gateway team and business to our global Dispensing and Specialty Closures franchise,” said Adam Greenlee, President and CEO. “Gateway has existing capacity for growth as it is very well capitalised 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,” concluded Mr. Greenlee.
The purchase price for this acquisition was $485 million, subject to customary adjustments including for net debt and working capital. With this acquisition, Silgan expects to realise tax benefits having a net present value of approximately $90 million as a result of the step-up in tax basis of the assets from this acquisition. In addition, Silgan expects to realise annual synergies as a result of this acquisition of approximately $2 million within 12 months primarily through procurement savings. Silgan funded the purchase price for this acquisition with revolving loan borrowings under its senior secured credit facility.
This acquisition is expected to be slightly accretive to the Company’s earnings in 2021, excluding the impact of required purchase accounting adjustments, with additional accretion expected in 2022.