Rexam Plc Proposes $805 Million Disposal

The shares of Rexam (LSE: REX) added 8p to 501p this afternoon after the global packaging firm announced the sale of two subsidiaries within its healthcare division.

The FTSE 100 member, which manufacturers about 60 billion aluminium cans every year, confirmed Montagu Private Equity had agreed to acquire the businesses for $805m.

Rexam added that the transaction was subject to regulatory approvals and was expected to be completed around the middle of the year. The blue chip said it would plan to return £450m of the proceeds to shareholders through a redeemable B-share scheme and a share consolidation.

During 2012, the two departing subsidiaries produced combined sales of £250m, an aggregate operating profit of £43m before central overheads and boasted gross assets of £538m.

Graham Chipchase, Rexam’s chief executive, said:

“The sale of the Healthcare business is part of our long term strategy to maximise shareholder value. The Pharmaceutical Devices and Prescription Retail Packaging divisions represent the majority of the value of our Healthcare business.” 

“Following the sale of Healthcare, we will be a focused beverage cans business with a strong financial position.  Our strategy is to balance growth and returns and we will continue to pursue selective investment opportunities in beverage cans in higher growth markets.”

Rexam also announced it was discussing the sale of another subsidiary within its healthcare division and would provide a further update “in due course”.

Of course, whether today’s disposal news as well as the wider prospects for the aluminium can sector both combine to make Rexam a ‘buy’ right now is something only you can decide.

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> Douglas does not own any share mentioned in this article.