Toyo Seikan buys US can making equipment supplier for US$775m

JAPAN – Toyo Seikan Kaisha Ltd, one of Japan’s largest packaging converters, is acquiring US-based can and end making equipment manufacturer Stolle Machinery Company, LLC, for about US$775 million (¥59.7 billion) from investment fund GSO Capital Partners.

Founded in 1961 and a former subsidiary of aluminum giant Alcoa, Stolle is one of the world's leading supplier of two piece can and end-making machinery for the global can making industry, with manufacturing facilities in US and Brazil, as well as sales/service centers in UK, Middle East and Asia.

Staffed with 421 employees, it designs and installs complete can and end lines for beverage and food cans and also supplies individual made-to-order machines.

In 2010, Stolle posted sales of US$246 million.

Can Machinery Holdings Inc, which indirectly holds all shares of Stolle, will be merged with TSK Merger Corporation, a special-purpose vehicle established by Toyo Seikan in the US, upon which Stolle will become a wholly-owned subsidiary of Toyo Seikan.

The Japanese company is funding the acquisition through a combination of cash and bank loans, and expects the transaction to complete by end-December 2011.

In its press announcement, Toyo Seikan listed its three strategic rationales for the transaction: “Make a preparatory step for future development of overseas operations; establish a robust vertically structured business model between packaging and machinery business; create synergies with Toyo Seikan’s existing machinery business.”

The Japanese company has assured that it “is committed to supporting the continued growth and enhancement of Stolle’s existing operations, products nd technology (and) will continue supporting Stolle’s business and management independence to respect Stolle’s current relationships with its key clients.”