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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 1, 1998
Owens-Illinois, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-9576 22-2781933
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
Owens-Illinois Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 33-13061 34-1559348
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(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
One SeaGate, Toledo, Ohio 43666
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(Address of principal executive offices) (Zip code)
Registrants' telephone number,
including area code: 419-247-5000
Exhibit Index -- Page 4
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The Registrants hereby amend the Current Report on Form 8-K dated March 2, 1998
to include additional information regarding the acquisition of the worldwide
glass and plastic packaging businesses of BTR Plc. The additional information
is included on pages 3 - 18 of Exhibit 99.
Item 5. Other Events.
On March 1, 1998, Owens-Illinois, Inc. issued a press release
announcing the signing of a definitive agreement to acquire the worldwide glass
and plastic packaging businesses of BTR Plc in an all-cash transaction valued
at US$3.6 billion. The transaction will be financed initially by bank
borrowings. Promptly after closing, Owens-Illinois intends to refinance part
of the bank borrowings by issuing a combination of public debt and equity
securities, with the objective of maintaining its debt-to-capital ratio at
approximately current levels. The transaction, which is subject to the
approval of BTR's shareholders and customary regulatory approvals, is scheduled
to close in the second quarter of 1998. The press release is set forth as
Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99 - Owens-Illinois press release dated March 1, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
OWENS-ILLINOIS, INC.
OWENS-ILLINOIS GROUP, INC.
By /s/ Lee A. Wesselmann
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Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Dated: March 4, 1998
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EXHIBIT INDEX
Exhibit
Number Exhibit
99 Owens-Illinois press release dated
March 1, 1998
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OWENS-ILLINOIS TO ACQUIRE BTR PACKAGING
Toledo, Ohio, March 1, 1998 --Owens-Illinois, Inc., (NYSE: OI) today
announced that it has signed a definitive agreement to acquire the worldwide
glass and plastic packaging businesses of BTR Plc in an all-cash transaction
valued at US$3.6 billion. The transaction is expected to be accretive in 1999
and have a neutral effect on earnings in 1998.
Joseph H. Lemieux, Owens-Illinois chairman and chief executive officer,
said, "BTR's worldwide glass and plastic packaging operations are an outstanding
fit with our existing business. This is a major step in our strategy to expand
our international glass and plastic packaging businesses, extend our global
presence, increase our operating margins, maintain our technological leadership,
and continue supporting our major industrial customers as they expand their
businesses worldwide."
Based on historical performance, O-I's international operations are
expected to contribute nearly half of the company's sales (on an annualized
basis) following completion of the transaction. In 1997, O-I's international
operations accounted for approximately 36% of the company's sales.
BTR Packaging had 1997 sales of approximately US$1.5 billion and, pro forma
for the acquisition, estimated earnings before interest, taxes, and unusual
items of US$305 million.
The transaction will be financed initially by bank borrowings. Promptly
after closing, Owens-Illinois intends to refinance part of the bank borrowings
by issuing a combination of public debt and equity securities, with the
objective of maintaining its debt-to-capital ratio at approximately current
levels.
The transaction, which is subject to the approval of BTR's shareholders and
customary regulatory approvals, is scheduled to close in the second quarter.
Mr. Lemieux added, "BTR Packaging's operations are widely recognized as
being among the best managed businesses in their respective industries. They
have set high standards of quality and customer service, based on leadership in
technology, cost control, and continuous improvement in productivity. We look
forward to having them join the Owens-Illinois family."
"We have long been positioned to meet the increasing demand for quality
packaging in Latin America, and since 1993 have made a series of strategic
investments that have given us a strong platform for growth in the emerging
markets of Central and Eastern Europe as well. With the acquisition of BTR's
operations in Australia and New Zealand, we will have a well established base
from which to expand in the Asia Pacific Region. To date, BTR has made only
minor investments in that region's emerging markets. Long-term, we expect the
region to show significant growth in glass containers and plastic packaging."
Mr. Lemieux noted, "In plastics, BTR's Continental PET unit is the leading
supplier of PET containers for products which are hot filled, such as certain
foods, juices, and other beverages. Continental PET complements our already
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strong plastic packaging capabilities and will enhance our worldwide position
as a leading producer of plastic bottles and closures."
BTR's ACI Glass Packaging unit is the leading glass container manufacturer
in Australia and New Zealand and a leading supplier in the United Kingdom. In
addition, with joint ventures in glass container manufacturing facilities in
China and Indonesia, ACI has made initial investments in economies which are
expected to show above-average growth in the long term. Owens-Illinois has
provided technology and equipment to BTR's glass container operations since
1967 and to certain BTR plastics businesses under a series of technical
assistance agreements.
In plastics, BTR is a leading supplier of polyethylene terephthalate (PET)
hot fill food and drink containers, with a strong presence in the United States,
Australia, New Zealand, the United Kingdom, the Netherlands, and in emerging
markets in such areas as Brazil, China, Hungary, Mexico, and Saudi Arabia
through its Continental PET Technologies unit. In addition, BTR's ACI
operations in Australia and New Zealand also make plastic bottles and closures
of high density polyethylene and polypropylene.
Owens-Illinois is the largest manufacturer of glass containers in North
America, South America, and India, and the second-largest in Europe. O-I also
manufactures plastic containers, plastic closures, plastic prescription
containers, labels, and multipack plastic carriers for beverage
containers.
Since 1991, not including the BTR units, Owens-Illinois has acquired 10
glass container companies serving emerging markets and eight plastic packaging
operations. O-I reported net sales of US$4.7 billion for the year ended
December 31, 1997.
This news release contains forward-looking statements that involve risks
and uncertainties that could cause actual results to differ materially from
those projected. Forward-looking statements are necessarily projections which
are subject to change upon the occurrence of events that may affect the
business. The Company also points out that acquisitions involve a number of
risks that can cause actual results to be materially different from expected
results.
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CONTACT: Owens-Illinois, John Hoff, 419-247-1203
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OWENS-ILLINOIS, INC.
Presentation on BTR Packaging
March 1, 1998
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ACQUISITION OF BTR PACKAGING
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Owens-Illinois has agreed to purchase the glass and plastic packaging
operations of BTR plc.
Aggregate consideration is approximately US$3.6 billion in cash.
BTR Packaging had 1997 sales of approximately US$1.5 billion, EBIT of
approximately US$305 million and EBITDA of approximately US$510 million. (a)
Transaction expected to close in second quarter.
O-I will finance the acquisition initially with bank borrowings.
The Company intends to refinance much of the acquisition debt with follow-on
public equity and debt offerings.
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
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BTR PACKAGING OVERVIEW
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Leading global packaging group
-- Produces glass and custom PET containers
-- Strong strategic positions in Asia-Pacific, Europe and the US
-- Outstanding operating performance
Glass Packaging -- Sales: US$900MM (60% of total) (a), EBIT: US$185MM (61%
of total) (a), EBITDA: US$335MM (66% of total) (a)
-- One of the largest packaging groups in the world
-- O-I licensee
-- Leading market share in Australasia
-- Initial investments in high long-term growth markets of China
and Indonesia
Plastic Packaging -- Sales: US$600MM (40% of total) (a), EBIT: US$120MM (39%
of total) (a), EBITDA: US$175MM (34% of total) (a)
-- Leading market share in US in custom PET
-- Strong presence in Asia-Pacific and growing presence in
emerging markets
-- World-class technology and product development skills
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
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ACQUISITION RATIONALE
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Consistent with O-I's business strategy
-- Reinforce leadership in glass and plastic packaging
-- Profitable growth worldwide
-- Technological leadership/innovation
-- Low cost/high quality producer
-- Reduce dependence on domestic glass
Strengthens global competitive position
Provides platform for growth in Asia-Pacific markets
Enhances O-I's operating margins
Accretive to earnings beginning in 1999
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ACQUISITION RATIONALE
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Strategic
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Enhances global leadership in glass
-- Only domestic producer in Australia/N. Zealand
-- Position in long-term growth markets (China, Indonesia)
-- Complementary (low-cost) position in UK market
Expands leading position in plastic packaging
-- Leader in US custom PET market
-- Technology leader
-- Solid customer relationships
-- Broad production base (N. America, Latin America, Europe,
Middle East, Australasia)
Significantly expands international presence
Operating
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Glass Operations
-- Expands customer base and capability to be global supplier
-- Asian platform for future growth
-- multiple opportunities identified
-- Increased purchasing leverage worldwide
Plastic Operations
-- Adds leading-edge PET technology and manufacturing capabilities
-- Cross-sell opportunities for closure operations domestically
and internationally
-- significantly broadens customer and manufacturing base
Financial
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Enhances growth prospects
-- Custom PET has experienced double-digit unit growth in each of
the last two years
-- Asian glass businesses provide platform for future expansion
Increases pro forma margins (a)
-- 1997 EBITDA: 23% to 25%
-- 1997 EBIT: 15% to 17%
Reduces dependence on domestic glass
-- Domestic glass reduced from 38% to 30% of sales
Accretive to earnings in 1999
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
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BTR GLASS PACKAGING SEGMENT OVERVIEW
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Leading market segment shares
-- Australia
-- New Zealand
-- United Kingdom
Major end use markets
-- Beer, wine, spirits, food
Industry-leading margins
-- O-I EBIT margins better than publicly-reporting competitors
-- BTR Packaging EBIT margins even better than O-I
1997 BTR glass EBIT margin (a) 21.0%
1997 O-I standalone glass containers segment EBIT margin 14.9%
World-class technology -- O-I licensee
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
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DESCRIPTION OF BTR ASIA-PACIFIC GLASS PACKAGING
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Description
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Plants in Australia, New Zealand, China and Indonesia
Leading market position in Australia and New Zealand
Operating Data: (a)
1997 sales of US$600 million
1997 EBIT of US$125 million
1997 EBIT margin of 21%
Strong customer base
World-class technology and manufacturing skills -- O-I technology
agreements
Strategic holding in General Chemical (25%) -- soda ash
Outlook
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Competitive positions are expected to be maintained
Ongoing cost reduction program provides very competitive cost structure
Geographic Distribution -- 1997 Sales
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Australia 79%
China 9%
New Zealand 9%
Indonesia 3%
Geographic Distribution -- 1997 EBIT
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Australia 84%
New Zealand 11%
China 4%
Indonesia 1%
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DESCRIPTION OF BTR UK GLASS PACKAGING
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Description
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Leading position in the UK glass market (approximately same as O-I)
Operating Data (a):
1997 sales of US$298 million
1997 EBIT of US$59 million
1997 EBIT margin of 19.8%
Strong customer relationships with large food and beverage
manufacturers
O-I licensee with strong lightweighting skills
UK leader in glass labeling expertise
Superior manufacturing capabilities and flexibility
Outlook
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Increasing share in growth markets
Upside potential through conversion of returnables and increased
penetration of food segment
Significant capital expenditures already undertaken
UK Glass Product Mix (b)
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Food 32%
Beer 20%
Soft Drinks 17%
Spirits 13%
Other 18%
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
(b) Source: Management estimates
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BTR PLASTIC PACKAGING SEGMENT OVERVIEW
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Global plastics business with strong presence in the US and
Asia-Pacific
Industry leader in custom-design plastics
-- Multiyear supply agreements
-- Broad manufacturing capabilities
Participation in fast-growth segments
-- End markets: isotonics, fruit juice products,
multilayer/returnable soft drinks
-- Products: hotfill, multilayer barrier, refillable packages,
broad array of HDPE packaging and closures
-- Significant potential upside from PET market
Industry-leading margins
-- O-I plastics EBIT margins better than publicly-reporting
competitors
-- BTR plastics EBIT margins even better than O-I
1997 BTR plastics EBIT margin (a) 20.0%
1997 O-I standalone plastics group EBIT margin 16.7%
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
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DESCRIPTION OF BTR PLASTIC PACKAGING
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Description
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Global custom-molded plastic -- 26 factories worldwide, including US,
Mexico, Hungary, Brazil, Saudi Arabia, UK, Netherlands, Australia,
New Zealand, China
Operating Data (a):
1997 sales of US$600 million
1997 EBIT of US$120 million
1997 EBIT margin of 20%
Industry leader in custom PET with broad manufacturing capabilities
Superior operating performance reflects a focus on value-added
products, leading-edge technology and product innovation
Strong track record in design and commercialization of custom PET
products
Outlook
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Historic unit volume growth in excess of 10% per year
Operations in emerging markets -- expected to grow above the US
average and to contribute increasingly to top line growth and
profitability
Significant potential upside from multilayer barrier PET containers
Geographic Breakdown -- 1997 Sales (b)
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US 50%
Asia-Pacific 28%
Mexico 13%
Other 9%
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
(b) Source: Management estimates
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BTR PET PRODUCT PROFILE
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Sales by Worldwide Market
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Hotfill 36%
CSD Multilayer 20%
Custom Food 14%
Multilayer Barrier 12%
Refill 10%
Custom Non-Food 4%
Other 4%
Product Line Summary
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Hotfill
-- Containers for isotonics and fruit juice products
-- Leading supplier of hotfill in US
-- Proprietary conversion process
Multilayer barrier
-- Ultrathin proprietary approach
-- Containers with barriers superior to monolayer
Refill
-- Returnable packages for CSD applications in emerging markets
-- Popular where non-returnable packaging is not economical
Carbonated Soft Drink (CSD)
-- Developed freestanding footed container
-- Technology licensed widely
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SIGNIFICANT GLOBAL PRESENCE
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This page depicts a world map denoting, by country, the number of (1) glass
plants and (2) plastic plants O-I and BTR Packaging operate as follows:
BTR Packaging Number
O-I Number of Plants of Plants
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Country Glass Plastic Glass Plastic
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Australia 5 10
Bolivia 1
Brazil 3 2
China 1 2 2
Colombia 2
Czech Republic 2
Ecuador 1
Estonia 1
Finland 1 1
Hungary 1 1
India 3
Indonesia 1
Italy 12
Mexico 1 1
Netherlands 1
New Zealand 1 2
Peru 1
Poland 1
Puerto Rico 1 1
Saudi Arabia 1
South Africa 4
Spain 2
Thailand 1
United Kingdom 3 4 1
United States 23 38 8
Venezuela 5
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PRO FORMA COMBINATION ANALYSIS
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Following the acquisition, O-I expects to have higher margins and a stronger
global platform for growth in glass and plastics.
O-I Standalone O-I Pro Forma (a)
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$ % $ %
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1997 Net Sales
Glass containers $3,529 76% $4,430 72%
Plastics group 1,129 24 1,729 28
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Total (b) $4,659 100% $6,159 100%
1997 EBIT
Glass containers $525 74% $710 70%
Plastics group 189 26 309 30
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Total (b) $713 100% $1,018 100%
1997 EBIT Margin
Glass containers 14.9% 16.0%
Plastics group 16.7 17.8
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Total (b) 15.3% 16.5%
(a) Estimated pro forma for acquisition, goodwill adjustment from Australian
to US GAAP and excluding unusual items.
(b) Includes eliminations and other.
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ACQUISITION FINANCING PLAN
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Anticipated closing of acquisition in second quarter
Initially finance acquisition with bank borrowings
Expect to refinance bank borrowings with mix of:
Senior notes
Convertible preferred (mandatory common equity conversion)
Common equity
Credit profile is expected to be maintained
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SUMMARY CONCLUSIONS
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Excellent strategic fit
Enhances global competitive position
Strengthens O-I's worldwide glass operations
Reduces dependence on domestic glass
Complementary custom PET business with excellent growth prospects
Accretive to earnings beginning in 1999
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SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
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The statements contained in this release which are not historical facts,
such as those concerning future financial performance and growth are
forward-looking statements that are subject to change based on various factors
which may be beyond Owens-Illinois' control. Accordingly, the future
performance and financial results of Owens-Illinois and its respective
businesses may differ materially from those expressed or implied in any such
forward-looking statements. Such factors include, but are not limited to,
those described in Owens-Illinois' filings with the Securities and Exchange
Commission, as well as various factors related to the transaction described in
this release, including the costs of integrating the businesses of
Owens-Illinois and BTR Packaging and the realization of any increased margins
or accretion to earnings anticipated with respect to the transaction.
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