Two large European glass manufacturers are close to acquiring glass factories in Ukraine, each of which has posted annual sales in recent years in the range of $30 million.
Switzerland’s Vetropack Holding is negotiating to purchase a majority stake in Hostomel Glass Factory, located in Kyiv oblast. Greece’s Yioula Glassworks is eying the Bucha Glass Complex, also in Kyiv oblast.
All parties involved have shied away from providing specifics of their talks and have shunned inquiries regarding the financial performance of the glass factories involved. Yet securities filings obtained by the post show that Hostomel posted revenues of $35 million in 2004; one official at Bucha said that total sales at his factory complex tallied in at about $30 million last year.
Vetropack plans to buy a stake of about 75 percent in the Hostomel glass factory, the country’s largest glass manufacturer.
Claude Cornaz, CEO of Vetropack, told the Post on Jan. 31, that the acquisition will be held through an Austrian affiliate, Vetropack Austria Holding.
A letter of intent to purchase the stake has already been signed with the Ukrainian owners of Hostomel, Cornaz said while declining to identify them.
Vetropack and Hostomel have had friendly business relations for several years, he added.
Vetropack has a strong presence on the European glass market, with factories in Switzerland, Austria, the Czech Republic, the Slovak Republic and Croatia. The group is one of the top-five glass companies in Europe, Cornaz said adding that his company has a particularly strong presence in countries where it holds production facilities. The acquisition of a factory in Ukraine will strengthen Vetropack’s presence on the Eastern European market.
“The Hostomel factory will fit well into the group, as we work in the same sphere, namely glass packaging,” said Cornaz adding that his company plans to invest in Hostomel.
“We positively view Hostomel’s long-term investment plan and will improve the factory’s capacities to correspond to growing local market needs,” he added.
Vetropack’s gross revenues in 2004 amounted to 315 million euros. The company produced about 866,000 tons of glass. In comparison, Hostomel, which specializes in the production of glass bottles for alcoholic and non-alcoholic beverages, produces around 170,000 tons per year and holds a market share in Ukraine of about 25 percent.
The glass factory’s previous owners have invested into its future, capitalizing on two loans from the European Bank for Reconstruction and Development in recent years which amount to 15.6 million euros. The loans were used to increase production capacities and modernization efforts.
Meanwhile, the Bucha glassworks company, which also falls into the top five glass producers in Ukraine, may soon be sold to Yioula Glassworks SA of Greece.
The company currently has two separate production facilities, a packaging factory and a glassworks facility.
Yuriy Chechayliuk, director of the glassworks division, Ukraine’s only producer of patterned glass for doors, confirmed that negotiations are underway, adding that a sale arrangement could be inked within a month.
The complex is now owned by Ukrtara, a Ukrainian company.
Last fall, Yioula acquired Biomedsklo, a smaller factory based in Zhytomyr which glass containers for the medical and pharmaceutical industry.
Through holdings in Greece, Bulgaria and Romania, Yioula Glassworks produces about 530,000 tons of glass products annually.
Yioula and Vetropack will join France’s Saint-Gobain Group, which last year acquired a controlling stake in Ukraine’s Consumer-Sklo-Zorya glass factory from the EBRD. That factory posted sales of 23 million euros in 2004.
Saint-Gobain Group is one of the largest glass manufacturers in the world, with a presence in 49 countries worldwide. It generated sales of 32 billion euros in 2004.
Kamen Zahariev, director of EBRD Ukraine, said that the packaging sector of Ukraine’s bustling glass industry has been dynamic thanks, in part to sharp growth in the country’s beer, liquor and food sectors. The EBRD has invested about 41 million euros into Ukraine’s glass sector, making it one of the main players in the market.Annual glass packaging production volumes in Ukraine currently stand at about 3 billion units, valued approximately at $300 million. The sector is expected to grow by 20-25 percent this year.
