Rexam buys out China can manufacturer

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Rexam, the UK-based global packaging company, has reached an
agreement to acquire the 40 per cent shareholding it does not own
in the Chinese beverage can business, Rexam Beverage Can Zhao Qing,
from its joint venture partner, Hua Xing Investment Limited.

Based in Hong Kong, Rexam's beverage can manufacturing operations in Asia are currently limited to the Zhao Qing facility, but the company sees the buy out as being a move that will help it establish itself in the market and that will lead to further acquisitions that will help feed current market growth in that sector.

Rexam​ said that the acquisition is subject to the formal approval of the Chinese authorities, which is expected to happen in the next few months.

In 2003, Zhao Qing had sales of £11 million (€15m) and, under UK GAAP, had net assets of £2.8 million. The plant is located near Guangzhou southern China, one of the key economic regions in the country, and supplies the local regional market for both soft drinks and beer. Currently it has one production line and employs a workforce of 150 people.

Rexam says that the business will continue to be part of its Beverage Can Europe and Asia operation. The division currently manufactures over 40 billion cans a year, with operations mainly concentrated in Western Europe.

Commenting on the acquisition Lars Emilson, Rexam's Chief Executive, said: "Following on from our recent acquisition in Mexico, this move strengthens our position in another emerging market that has enormous potential for us. We can now fully integrate the business and continue to serve the growing needs of our customers."

Rexam's move to expand in the market will meet rising demand for beverage packaging fuelled by the growth of both the soft beverage and beer industries. The China beer market will soon become the largest by volume in the world, whereas the consumption of soft drinks, although still tiny by world standards, is currently growing at the fastest rate of any market in the world.

In turn the expansion of the soft beverage and beer markets has continued to give can packaging manufacturers reason for cheer. Indeed, it is primarily the demands of this segment that give reason for experts to estimate that the China metal packaging industry will increase in value from the current $2.83 billion to $3.88 billion by 2008.

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