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AptarGroup Buys Stelmi, Cuts 2Q View

by Zacks Equity Research

July 10, 2012 | Comments : 0 Recommended this article: (0)

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AptarGroup, Inc. ( ATR - Snapshot Report ) has completed the acquisition of Stelmi Group, thereby expanding its offerings in the pharmaceutical industry. The company has also lowered its guidance for the second quarter.

In May this year, the company had signed an agreement to acquire France-based Stelmi for approximately 165 million euros ($207 million). Stelmi makes elastomer primary packaging components used for injectable drugs. It operates two manufacturing plants located in the Normandy region of France and has a Research and Development center near Paris.

In 2011, Stelmi generated revenues of 83 million euros ($104 million) and earnings before interest, taxes, depreciation and amortization (EBITDA) margins in the range of 21-25% over the past 3 years.

AptarGroup for its part lowered the fiscal 2012 second quarter earnings per share guidance to a range of 60 cents to 62 cents from the previous guidance of 70 cents to 75 cents. This is to reflect acquisition costs of 5 cents per share related to the Stelmi acquisition as well as weak sales volume in the company’s European operations and strengthening of the U.S. dollar compared to the Euro (a negative impact of 2 cents per share). The Zacks Consensus Estimate for the quarter is currently pegged at 67 cents.

The Stelmi acquisition fits with Aptar’s strategy to enter new markets and applications, and to look for opportunities in the pharmaceutical and biotech industries. This acquisition marks Aptar’s foray in a new area of primary packaging components used in the injectable drug delivery market.

Crystal Lake, Illinois-based AptarGroup supplies a broad range of innovative dispensing systems for the fragrance/cosmetic, personal care, pharmaceutical, household and food/beverage markets worldwide. The company has its manufacturing facilities in North America, Europe, Asia and South America. It competes with Amcor Ltd. ( AMCRY ) and Rexam plc ( REXMY ) . The stock currently has a Zacks #3 Rank (short-term Hold recommendation).

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