Bowater makes pounds 68m US deal

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The Independent Online
BOWATER, the acquisitive print and packaging group, is buying Tower Packaging, a medical packaging and film products company in Illinois, from Baxter Healthcare of the US for dollars 105m (pounds 68m), writes Gail Counsell.

The purchase will be made by Bowater's US subsidiary, Rexham, with dollars 65m of cash payable on completion on 30 April and the remainder due in instalments of dollars 10m a year for four years.

Tower, which will be renamed DRG-Tower, specialises in products like surgical drapes and sterilisable bags and pouches. At the end of December the company had tangible net assets of dollars 27m, although the deal also includes patent and technology licences and a long-term supply agreement between Bowater and Baxter.

This is necessary because Tower was primarily a captive in-house supplier to Baxter, and as a result made an operating loss of dollars 2.6m in 1992.

But Michael Hartnall, Bowater's finance director, said that if its sales had been on the basis now agreed with Baxter - with which Tower does 85 per cent of its business - the company would have made a profit of about dollars 9m.

The move would boost Bowater's percentage share of the US medical packaging market 'from the high twenties to the low thirties', Mr Hartnall added. Bowater is already the largest supplier of medical packaging products in the US.