Mitch Cantor’s Mountain Lake Partners presentation from Grant’s Spring Conference 2015 on Owens-Illinois, Koppers Holdings and Tidewater titled, ‘Value Times Three’.
Owens-Illinois: Corporate History
1903 Michael Owens completes the automated bottle blowing machine and forms Owens Bottle Machine Company.
1929 Owens-Illinois was formed after the acquisition of Illinois Glass.
1958 Owens-Illinois sells Kaylo, its asbestos containing insulation unit, to Owens Corning. During the 10 years of ownership, aggregate sales are less than $40 million.
1987 KKR leveraged buyout for $3.7 billion
1988 With the acquisition of Brockway Glass, OI’ domestic market share is greater than 40%
1991 Initial public offering 2014 Asbestos related payments total $4.4 billion
2015 Current market capitalization is $3.8 billion
Glass Bottle Industry Dynamics
- High fixed costs
- Consolidated market
- Barriers to entry
- Steady demand
- Limited growth
- Generates lots of cash
- In Europe, Owens-Illinois has 25% market share.
- The top three firms have 67% market share.
- Normal margins are 12.5%.
- In North America, Owens-Illinois has 40% market share.
- The top three firms have 85% market share.
- Normal margins are 15%.
- In Brazil, OI has 65% market share.
- In Peru, Ecuador and Columbia, Owens-Illinois has 100% market share.
- Normal margins are 20%.
- In China, OI has about a 2% market share with a 0% margin.
- In Australia and New Zealand, Owens-Illinois has 70% market share. Normal margins are 15%.
See full presentation below.