Owens-Illinois postpones bid date as Visy mulls alternatives

The O-I Glass factory at Cranebrook in western Sydney.

It is little surprise Owens-Illinois has delayed the sale of its $1bn Australian and New Zealand glass bottling business, given what we are hearing about one of the bidders, billionaire Anthony Pratt’s Visy Group.

Final bids were due on February 19 but that date has now been pushed back until the first half of next week, as revealed by DataRoom on Wednesday.

Now this column understands that Visy has baulked at the price being asked by the vendors, partly because it believes it can build greenfields glass bottling plants more cheaply than taking on O-I’s ageing, capital-hungry operations.

The value of O-I’s extensive land banks has also presumably been built into the purchase price, and it could be sold by Visy as a real estate play if it did get control of the assets.

But apparently Visy has been approached by some of its biggest glass customers in recent times saying they would give the company more business if it was willing to invest in greenfields plants.

Other parties vying for the business are Pacific Equity Partners and Blackstone.

O-I is believed to be eager to divest the Australian and New Zealand operations as it wrestles with challenges closer to home, where it remains eager to redeploy the proceeds from a sale.

It comes after the US-based company has faced shareholder activism, as did Campbell Soup Company, which offloaded its Australian biscuit business Arnott’s to Kohlberg Kravis Roberts.

As is the case with O-I, Goldman Sachs was working on that sales process and also promoted the merits of embarking on a sale and leaseback of the property assets.

KKR has moved to sell the Arnott’s properties.