£135m disposal is in the can for Rexam

Rexam, the consumer packaging company, is to sell its healthcare flexible packaging business to Australian company Amcor for £135m. The proceeds will be used to cut debts.

The business specialises in products such as the foil films on blister packs of tablets. It recorded operating profits of £11m last year. Net assets were £73m. John Middleton , an analyst at ABN Amro, described the deal as a "reasonable price" for a business that was "underperforming under Rexam's ownership and should have had higher returns".

Rexam's chief executive Rolf Börjesson said: "Rexam remains strongly committed to the healthcare and pharmaceutical segments ... and intends to continue to expand in this area. However, the healthcare flexibles business, our only business in the flexible packaging business, has found a more appropriate home." The disposal falls in line with the company's strategy, adopted in 1996, to transform Rexam from a large conglomerate involved in everything from tissue making to merchant banking into a compact company focused on consumer packaging. This restructuring has paid dividends with Rexam entering the FTSE 100 index in September 2002. It is now one of the five largest companies in its market. Rexam is the top supplier of cans in Europe, employing 21,000 people in 20 countries and generating an annual turnover of about £3bn.

Amcor is the world's largest plastic packaging producer and flexible packaging is used for goods such as fresh food, coffee, soups and chocolates as well as personal care products. The acquisition will make it the largest supplier of packaging to the healthcare sector.

Rexam shares fell by 4p to 420p.