Rexam Plc, the biggest beverage-can maker, began the sale of its Personal Care operations after the unit’s results disappointed, said Chief Executive Officer Graham Chipchase, adding that Barclays Capital is managing the offer.
“We’ve just started the marketing process for the personal care business and sent out a confidential information memorandum,” Chipchase said today in a telephone interview, declining to elaborate on the possible buyers or valuation of the unit that produces packaging for cosmetics and toiletries. Rexam doesn’t plan to sell its health-care business, he said.
The company, which makes cans for Coca-Cola Co., Anheuser-Busch InBev NV and PepsiCo Inc., today said its 2011 net income tripled after the sale of its Closures unit, a producer of seals for drink containers, to Berry Plastics Corp. for $360 million. It announced plans to sell the Personal Care unit in November.
“We’ve valued the business at 350 million pounds,” Ross Gilardi, a Bank of America Merrill Lynch analyst, said today in a research note. “We expect it to be sold. We think most of the potential Personal Care proceeds go back to holders in the form of share buybacks and dividends. This is key to a re-rating.”
Rexam was the biggest gainer in the U.K.’s benchmark FTSE 100 index, rising 7.4 percent to 413 pence, the highest level since May 19, 2008. It has advanced 17 percent this year.
The Personal Care sale may allow for acquisitions or return of cash to shareholders through dividends or buybacks, Chipchase said Nov. 17. Rexam today declared a 2011 dividend of 14.4 pence on net income of $376 million pounds ($593 million) and a 2.5 percent gain in sales to 4.73 billion pounds. Personal Care’s “overall trading was disappointing,” London-based Rexam said.
Rexam, operating in the U.S., Latin America, Europe and Asia, plans to expand in Brazil with a factory with capacity of 1.2 billion cans a year. It’s also investing about 30 million pounds over two years to raise output at the Taloja plant near Mumbai. A new line, starting in the fourth quarter, will boost annual production to 950 million cans from about 400 million.
“In Beverage Cans, we are seeking further opportunities for investment as well as bolt on acquisitions or joint venture partnerships,” the company said in a statement today.
Rexam is “cautious” on the world economy. “We face certain cost challenges in 2012 together with the impact of a key Healthcare product coming off patent,” it said.