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What: Shares of glass bottle manufacturer Owens-Illinois Inc (NYSE:OI) jumped as much as 11% today after announcing the acquisition of Vitro's food and beverage business.
So what: Owens-Illinois is buying Vitro's leading glass container maker assets, including five plants in Mexico and one in Bolivia for $2.15 billion in cash. The acquisition is expected to add $945 million in revenue and adjusted EBITDA of $278 million plus $30 million in cost synergies annually. Financing for the transaction will be provided by Deutsche Bank and Owens-Illinois expects to lower leverage by paying off debt from acquired free cash flow in coming years.
Now what: This is a good strategic move into Latin America and paying just 7.7 times adjusted EBITDA is a decent price in today's market. I think this will prove to be a strong acquisition and this should help push shares of Owens-Illinois should continue to higher long-term.
Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.