Montagu Private Equity acquires Rexam's healthcare packaging arm for $805M

Rexam, a global maker of beverage cans and other products, will unload most of its healthcare packaging business onto Montagu Private Equity in an $805 million cash deal.

Reuters reported on the sale, which affects a division that makes bronchial inhalers, injection syringes and other drug delivery medical devices. As the article notes, Rexam is seeking another suitor for a segment of the business focused on making plastic bottles for over-the-counter pharmaceuticals.

It looks like the sale, while impressive, isn't meeting analysts' expectations. Back in August, when news broke that Rexam was soliciting buyers, the buzz revolved around a sale that could hit the $1 billion market. But a Macquarie Research analyst told Reuters that the deal won't reach that point, even after the over-the-counter pharmaceutical plastic bottle arm gets sold.

Reuters noted that German Medical supplier Gerresheimer had also been interested in the business at some point, along with private equity outfits Bain Capital, KKR & Co. U.S.-based Berry Plastics and Silgan Holding were also among potential bidders, according to the story.

So why would Rexam sell off its device/drug delivery/healthcare arm? As Reuters noted it all comes down to beverage cans, which amounted to the vast majority of Rexam's business last year. Freed of that specialized arm, Rexam can focus full force on events that should boost beverage can sales through the roof, Reuters explained, including the Soccer World Cup in Brazil.

While bronchial inhalers and syringes aren't the sexiest part of the device industry, they are a reliable one. After all, there will always be a need for both, and Montagu has determined that it can tap into its potential.

- read the full Reuters story