Alcoa, the US packaging group which makes the Reynolds and Baco food wrap brands, is to buy the Chicago-based Ivex Packaging Corporation for around $790 million, broadening its presence in the food packaging sector.
The acquisition does not include Ivex's 48.2 per cent stake in compatriot company Packaging Dynamics Corporation, which will be distributed to Ivex's shareholders. PDC makes food bags, bagel bags and industrial packaging, and was formed as a subsidiary of Ivex following the latter's acquisition of Bagcraft Corp. of America in 1998.
Ivex is a leading manufacturer of specialty plastic packaging for the food, electronic, medical and retail markets, and its sales reached $643 million in 2001. The majority of its business is based in North America, but it does have strong presence in Europe and Southeast Asia.
"The addition of Ivex will broaden Alcoa's position in the food packaging and foodservice packaging markets, where we already have a strong presence," said Alcoa chairman Alain Belda. "This acquisition is consistent with our strategy of profitably growing our packaging and consumer business."
Alcoa said it expected the transaction to be add to its earnings within the first year and estimated the potential for annual synergies to be $75 to $100 million within three years.
Alcoa's global packaging and consumer segment - to which Ivex will now belong - had $2.7 billion in revenues and an after-tax operating income of $185 million in 2001.