Alcan has acquired the outstanding minority share of Propack in a deal that further cements the company's standing in the Chinese market. The acquisition forms part of a major restructuring exercise, in which the closure and downsizing of European plants signifies the current market climate.
The acquisition is an attempt by the aluminium packaging provider to extend its offerings to a region Alcan will invest significant resources to in the future. China is an emerging market, in which faster population growth and rapidly increasing levels of industrial output will stimulate demand for flexible forms of packaging.
Alcan has acquired the remaining 35 per cent stake in an agreement that originated in May 2003, where Propack became part of Alcan as a result of the acquisition of VAW Flexpac. The company had sales of $90 million in 2004. Terms of this latest deal were not disclosed.
Alcan's acquisition may be another sign that the Asian markets are attracting a lot of attention from packaging companies and their suppliers.
"This investment is further evidence of our commitment to the dynamic Chinese market - a region in which we are looking to continue to make investments in the coming years," commented Christel Bories, Alcan's president and chief executive officer.
Pharmaceutical packaging, particularly plastic closure production, is already highly consolidated, with 465 companies involved in the European market in 2004.
Analyst AMI estimates that as many as 200 companies could move out of closure production in Western Europe over the next five years in an already consolidated industry.
The leading 10 companies account for about 60 per cent of the market and the top 25 account for about 75 per cent.
Alcan's resturucturing plans include the closure of its Cayey pharmaceutical glass vial operation, based in Puerto Rico, which was done to streamline its North American vial manufacturing network.
In May of this year, Alcan opened a new production centre dedicated to pharmaceutical packaging at its Alzira plant, located near Valencia in Spain.
Christel Bories, chief executive of Alcan Packaging , said the new plant would supply printed packaging material to Spanish, Portuguese and locally-based multinational customers.
Roughly half of Alcan Packaging's 180 plants are located in Europe, and last year the company invested $204 million in the region.