updated 6/11/2007 9:50:52 AM ET 2007-06-11T13:50:52

British packaging company Rexam PLC said Monday it has agreed to acquire the plastic packaging unit of Owens-Illinois Inc. for nearly $1.83 billion in cash.

The division makes plastic prescription bottles, tamperproof closures and plastic medical devices. Rexam said the unit reported a profit of $114 million on sales of $760 million in 2006.

The sale will enable Owens-Illinois to reduce its debt, give the company greater operating flexibility and allow it to focus resources on improving its core glass business, Al Stroucken, chairman and chief executive officer of Owens-Illinois, said in a statement.

The plastics business has approximately 2,800 employees in 19 plants in the United States, Mexico, Brazil, Hungary, Singapore and Malaysia with a headquarters and technical development center in Perrysburg, Ohio.

Rexam said it will finance the acquisition by selling 58 million new ordinary shares, equaling 10 percent of the existing share capital, and through the proceeds of a subordinated bond issue and the sale of Rexam's glass business.

The acquisition is expected to be completed in the third quarter, Rexam said, subject to approval by regulatory agencies and Rexam shareholders.

"The acquisition of O-I Plastics will transform our plastic packaging business and is consistent with our strategy to expand our positions in growth markets," said Rexam CEO Leslie Van de Walle.

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