Crown Holdings, Inc. (CCK) has received the approval of Mexico's Federal Competition Commission to acquire Dutch brewer Heineken’s Mexican packaging business, EMPAQUE. The $1.225 billion acquisition will not only help Crown to expand its presence in the growing Mexican market but also fortify its global beverage packaging business, while contributing between 15 to 20 cents per share to its 2015 earnings.
The acquisition, announced by Crown in Sep 2014, is expected to be completed shortly. EMPAQUE is a leading Mexican manufacturer of aluminum cans and ends, bottle caps and glass bottles for the beverage industry, with a workforce of 1,500 people. It operates two beverage can plants, a plant that manufacturers beverage can ends, aluminum closures and bottle caps, a glass bottle plant and a glass service facility in Mexico.
The acquisition of EMPAQUE will significantly enhance Crown's strategic position in beverage cans, both in the domestic as well as international markets. With an annual supply of over 24 billion units to beer and soft drink customers, Crown will be catapulted to the position of the second largest beverage can producer in North America. Globally, Crown will produce more than 62 billion beverage cans, accounting for 20% of total production. This takeover will also strengthen Crown’s industry-leading geographic presence, as over 50% of beverage can revenue will stem from the faster growing developing regions.
In addition, Crown will benefit from the Mivisa acquisition, which will considerably improve its position in the European food can segment. The acquisition contributed positively to Crown’s revenues in the fourth quarter and is expected to do the same in the future. Further, Crown is poised to benefit from global beverage can growth and savings from its cost reduction activities.
Philadelphia-based Crown is a leading supplier of packaging products to consumer marketing companies. The company manufactures aluminum beverage cans, food cans, aerosol cans and other packaging products.
Crown Holdings currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Sealed Air Corporation (SEE), Berry Plastics Group, Inc. (BERY) and Bemis Company, Inc. (BMS). While Sealed Air and Berry Plastics sport a Zacks Rank #1 (Strong Buy), Bemis holds a Zacks Rank #2 (Buy).
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