DUESSELDORF, Germany, June 30, 2015 /PRNewswire/ --
- Gerresheimer will sell its borosilicate glass tubing business to Corning
- Corning and Gerresheimer enter into a 10-year-supply agreement for pharmaceutical glass tubing
- Sale proceeds will amount to EUR 196m debt-free
- Corning and Gerresheimer will form a joint venture to accelerate innovations for the pharmaceutical glass packaging market
- Gerresheimer's outlook for the financial years 2016 to 2018 adjusted to reflect the future disposal of the tubing business
In line with its strategy to focus on packaging solutions for its pharmaceutical customers, Gerresheimer today announced that it will sell its glass tubing business to Corning Incorporated. Glass tubing is an intermediate product which Gerresheimer manufactures mainly for its own plants, where those tubes are used to manufacture ampoules, vials, cartridges and glass syringes. To a lesser extent Gerresheimer sells tubing to external customers. Gerresheimer and Corning enter into a 10-year-supply agreement for borosilicate glass tubes that secures Gerresheimer's high demand for glass tubing. Corning, with its strong expertise in glass, materials sciences and material innovation, is well-positioned to manufacture and further develop highest-quality glass tubing for the pharmaceutical packaging industry. In addition both companies will establish a joint venture to accelerate innovations for the pharmaceutical glass packaging market.
"In line with our strategy we will focus on our core competency of developing and manufacturing primary packaging solutions and delivery devices serving our pharma customers' needs. Corning is an expert in the field of material sciences and glass production and therefore our perfect partner when it comes to serving our needs for highest quality pharmaceutical glass tubes. This is fully reflected in a long-term supply contract between us. Furthermore joining forces with Corning in a venture for innovative pharmaceutical glass packaging products will expand our product portfolio of high-quality tubular pharmaceutical packaging products," said Uwe Röhrhoff, CEO of Gerresheimer AG.
Upon closing, Corning will assume ownership of both Gerresheimer tubing plants, i.e. the plant in Vineland (New Jersey, USA) and Pisa (Italy) with approximately 300 employees. The current tubing business of Gerresheimer holds a strong number two position in the global pharmaceutical tubing market. The FY 2014 revenues for glass tubing of Gerresheimer amounted to EUR 83m. The EBITDA margin in 2014 stood at about 23%. The sale proceeds are approximately EUR 196m on a debt-free basis. The closing of the transaction is subject to certain conditions as well as regulatory approval. The closing is expected by the end of 2015.
In addition, Corning and Gerresheimer will set up a joint venture to accelerate pharmaceutical glass packaging innovations. Corning will hold a 75% stake in the joint venture, Gerresheimer 25%.
The financial guidance of Gerresheimer for FY 2015 remains unchanged given that the deal is expected to be closed by the end of 2015. For the financial years 2016 to 2018 the outlook has to be adjusted to reflect the disposal of the tubing business as follows:
- Average annual organic revenue growth of 4% to 6%
- Adjusted EBITDA margin approximately 20% by 2018
- Capital expenditure in the range of 8.0% to 9.5% of revenue at constant exchange rates
- ROCE will increase slightly
SOURCE Gerresheimer AG