Marriage of the canning giants
Crown, the leading manufacturer of metal containers in the world, was attracted to Spain's Mivisa because of its production and marketing techniques
The secrets held in a can reveal themselves readily in Las Torres de Cotillas, a town with a population of over 20,000 situated just south of Murcia. Everyone there knows Mivisa Envases, a company that specializes in making metal containers for food products that employs over 1,000 people and has been on the go for 40 years.
"It's the strongest and the best," a local barman says, not without reason. Mivisa is the global leader in easy-to-open cans, producing 6 billion ring-pull containers a year. It is also number three in Europe in the production of food cans, with output of 4.3 billion units a year. Its annual turnover is some 600 million euros.
Those figures were reason enough for the world leader in the sector, Crown Holdings, with 149 factories in 41 countries and 22,000 employees, to decide to stop competing against Mivisa and to purchase the Spanish company for 1.2 billion euros, pending authorization by the anti-trust authorities.
"We're more efficient than the rest and more profitable," says Mivisa's chief executive officer, Tomás López, who has spent 33 years with this family-owned business established in 1972 by Miguel Vivanco, hence the name of the company (a combination of the first two letters of his first and last names plus SA, which is the denomination of a limited liability company in Spain).
At the time the company was established, the southeastern region of Murcia was a fertile orchard that provided work for dozens of companies exporting vegetables in jars and cans. Back then, Mivisa had a workforce of 1,500 and its factory was in the center of the city of Murcia.
All that changed when the Vivancos family sold the firm in December 2001 for 200 million euros to private equity firm Suala, which in turn offloaded 50 percent to fellow private equity firm PAI. In 2005, the company was sold again, to CVC, for 500 million euros and in 2011 to Blackstone and N+1 for 900 million euros.
“The recovery is not our problem”
The fact that the giant Crown Holdings has bought a Murcia-based company that makes metal containers to package food is a clear sign of the renewed interest of foreign companies in investing in Spain.
There have been other examples of similar interest of late. In October Microsoft founder Bill Gates acquired close to a 6-percent stake in Spanish construction and services group Fomento de Construcciones y Contratas (FCC) for some 113 million euros. Gates is betting on a recovery in the Spanish economy from which FCC, which is controlled by Spanish businesswoman Esther Koplowitz, will benefit.
Another recent big purchase was the acquisition by Japan's NTT of the Spanish consultant Everis for 75 billion yen (about 560 million euros), while Chinese oil giant Sinopec also showed its interest in acquiring oil firm Repsol's 30-percent stake in the Spanish utility Gas Natural Fenosa.
However, Mivisa's chief executive officer Tomás López believes the significance of Crown's move has been "overblown." "The economic recovery in Spain won't take off with this deal," he says. "We've been working for this for years and the politicians had nothing to do with it."
The best part of the deal for López is that the group will once more be in the hands of an industrial company rather than private equity firms, as has been the case since 2001.
Crown's chairman, John Conway, said earlier this month that Mivisa is an "extraordinary" company that "we have followed and admired for years."
Mivisa has achieved an average annual increase in its revenues of 9 percent over the past decade and obtained over half of its revenues last year outside of Spain.
"All these private equity firms let us operate at will with professionalism and helped develop the company's international business," López says. Apart from Murcia, Mivisa now has factories in La Rioja, Asturias, Galicia, Extremadura and Seville within Spain. It went international in 2007, opening plants in the Netherlands, Morocco and Hungary, and this year opened up shop in Peru.
Another plant is due to open in Ghana, while the next stage of Mivisa's international expansion will start in France next year.
The terms of the purchase of Mivisa by Crown guarantee that the whole workforce in Spain will be kept on, while its headquarters will remain in Murcia. "We are two very strong private companies in the same business that have decided to cease to compete with each other and throw in their lot together," López says.
López adds that Crown's interest in acquiring its rival reflects the fact that "we know the canning business and everything we do is in-house." But there are other reasons. The size of the workforce is well adjusted, with three shifts a day from six in the morning, provided there are sufficient orders. The Murcia plant covers 200,000 square meters and employs 1,080. The total workforce in Spain is 2,000 and 2,300 across the group as a whole.
But one of the main reasons that the company has been able to skirt the crisis when others have had to close is the automation of its production process, which allows it to be quicker in its procedures. Its delivery of treated tinplate and ready-to-use lids to assembly plants closest to the client is also a plus. "When you transport finished cans you're also transporting the air inside them, while plates and lids are very easy and less costly to transport," López explains. A single truck can transport 2.5 million lids to any of its factories around Spain.
Mivisa has been working for years with local firms to improve its production techniques, to the extent of coming up with machines with the capacity to produce between 2,200 and 3,200 lids a minute and deliver them to an assembly plant close to the client who then fills the containers with his products. "We pass all of the savings we glean from this on to the client," López says.
Crown Holdings Chairman and Chief Executive Officer John Conway extolled the merits of Mivisa at the time of the announcement of the acquisition, saying the company was "even better than us."
"Mivisa has demonstrated impressive sales and profitability growth in recent years through prudent investment, highly efficient manufacturing practices, focused innovation and excellent customer relationships," Conway said. "We believe that adding this well-performing business to our broad network of food-can operations in Europe will result in compelling benefits to both customers and shareholders."
Mivisa's annual revenues have increased from 180 million euros in 2001 to about 600 million last year and López is also happy about Crown's move. "If you buy something that you see is better than your own business, then it makes sense to allow people to carry on working as they have," he says. "We have a business model that is different from them, which they are ready to export."