BGC expands interest in packaging
Two M&As spurred by outbreak demand
BG Container Glass (BGC), a maker and distributor of glass containers, is preparing to make deals worth 1.65-billion-baht to acquire two companies in a bid to fuel its growth and become a leader in total packaging solutions.
The expansion, which allows it to offer a wide range of packaging products apart from glass containers, is expected to help the company double revenue growth in the next five years from 10 to 25 billion baht.
Last year, BGC recorded revenue of 10.9 billion baht and net profit was 516 million baht.
On Monday, BGC's chief executive Silparat Watthanakasetr said the company faced many challenges in 2020, ranging from a curfew and prohibition on the sales of alcoholic drinks to contain the outbreak to the increase in energy costs in the last quarter last year.
"We managed to achieve satisfactory performance as we look further for opportunities to develop our business to make business stronger," Mr Silparat said.
The BGC board earlier approved a merger and acquisition (M&A) plan to acquire 100% shares in two companies: BG Packaging (BGP), a producer and distributor of plastic films, plastic caps, PET bottles and preform, and Bangkok Visypak Company (BVP), a producer and distributor of corrugated paper boxes.
Both companies are subsidiaries of the Boonrawd Brewery.
BGP is valued at 1.15 billion baht while BVP is valued at 500 million baht, according to KTBST Securities.
BGC plans to allocate 1.65 billion baht from its 2021 investment budget, worth 2.55 billion baht, for the acquisitions. The remainder will go to a joint venture project under talks.
The new asset purchases will be part of further expansion in products related to glass packaging.
"Our business expansion through M&A suits growing demand for packaging products, stimulated by the pandemic," said Mr Silparat.
KTBST Securities expected the acquisitions will cause a "small impact" on BGC's estimate of its 2021 profit.
The analysts said the greater interest burden on BGC will be absorbed by profits made by the two companies.
In 2020, BGP and BVP recorded combined profit of 75 million baht, according to KTBST Securities.
BGC has no plan to invest in renewable businesses after taking over a solar farm in Vietnam with capacity of 99 megawatts as it wants to focus more on the packaging industry.