Owens-Illinois May Buy Brockway for $744 Million

NEW YORK — Owens-Illinois and Brockway Inc. mulled a proposed $744-million merger on Thursday that, if completed, would increase Owens-Illinois’ leadership dramatically in the rapidly consolidating glass container industry.

Brockway and Owens-Illinois announced jointly in New York that they had negotiated a merger under which Owens-Illinois would pay $60 cash a share for Brockway’s 12.4 million common shares outstanding.

Shares of Jacksonville, Fla.-based Brockway rocketed higher following the announcement, rising $19.125 a share to $58.375 on the New York Stock Exchange after a delayed opening.

Will Draw Antitrust Scrutiny

Any merger agreement would be subject to the approval of Brockway’s board and federal regulators. Brockway’s board hoped to have a special meeting late Thursday to consider the proposal, but did not plan to announce the results officially until today, according to spokesman Donald Hughes.

Owens-Illinois and Brockway were the first- and third-biggest U.S. glass container producers, respectively, last year, together accounting for about 40% of the industry’s sales. A combination of the two would be sure to draw antitrust scrutiny.

The proposed combination also could raise competitive concerns from the soft drink, beer and food companies that are the industry’s biggest consumers, analysts said.

“It will put almost two-thirds of the glass (container) industry in the hands of just two companies,” said Cornelius Thompson, who follows the industry for the investment firm First Boston Corp.

Would Grant Lockup Option

The merger proposal comes two months after the $191-million acquisition of Diamond-Bathurst by Anchor Glass Container, which gave Anchor about 24% of the glass container market, or about the same as Owens-Illinois.

Owens-Illinois’ offer was contingent on sufficient financing being obtained and on at least two-thirds of Brockway’s outstanding shares being tendered.