Silgan Closes Nestle Assets Buy - Analyst Blog
September 07 2011 - 7:45AM
Zacks
Silgan Holdings Inc. (SLGN) closed the deal to buy the steel can making
assets of Nestle Purina PetCare Company for $25 million. In
addition, it has also inked a long-term supply agreement with
Nestle Purina PetCare Company.
The synergies from the
transaction are already incorporated in the earnings guidance as
Silgan had already started supplying cans to Nestlé Purina for
qualification purposes. Silgan guided third quarter adjusted
earnings to a range of $1.05 to $1.15 per share and full year
adjusted earnings to a range of $2.60 to $2.70 per share. Silgan
estimates that in 2011 approximately 90% of its projected metal
food container sales in North America will be under multi-year
customer supply arrangements.
The Zacks Consensus
Estimate for third-quarter 2011 is $1.12 per share. For full year
2011, the Zacks Consensus Estimate is $2.66 per share.
Silgan holds a dominant
position in the supply of metal containers in North America and
Europe. Also, the company is a leading worldwide supplier of metal,
composite and plastic vacuum closures for food and beverage
products.
The company’s growth since
its inception has primarily been driven by acquisitions. The
affiliation with Nestle will thus augment its leadership position
in food cans. The company will also be able to capitalize on the
expansive manufacturing facilities and hence offer a competitive
edge to the customers.
Previously, in March,
Silgan completed the acquisition of the food can business of
Vienna, Austria-based Vogel & Noot Holding for 250 million
euros (approximately $358.8 million). With this acquisition, Silgan
will be a leading manufacturer of metal containers in North America
and Europe.
Besides the metal food
container business, Silgan also strengthened its position in
the plastic container and closures businesses through strategic
acquisitions.
We retain a Neutral recommendation on Silgan Holdings. The
quantitative Zacks #3 Rank (short-term Strong Hold rating) for the
company indicates no clear directional pressure on the stock over
the near term.
Based in Stamford, Connecticut, Silgan Holdings is one of the
leading North American manufacturers of metal and plastic consumer
goods packaging products. Its products are used for a wide variety
of end-markets and it is the largest metal-container supplier for
food products in North America. The company competes with
Ball Corporation (BLL) and Crown Holdings
Inc. (CCK).
BALL CORP (BLL): Free Stock Analysis Report
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SILGAN HOLDINGS (SLGN): Free Stock Analysis Report
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