Ardagh makes €1.27bn binding offer for US glass packaging maker
Published 15/01/2013 | 05:00
PACKAGING giant Ardagh Group has made a binding offer worth almost $1.7bn (€1.27bn) for a glass packaging operation in the US.
The company, which sold the controversial glass bottle site in Ringsend in 2006, is in exclusive talks with French company Saint-Gobain to buy its glass packaging division, Verallia North America (VNA).
Ardagh described the offer, which would extend its presence into the United States wine sector for the first time and give it a presence in the west coast, as binding and irrevocable.
Paul Coulson, Ardagh Group chairman, said the acquisition would add scale, diversity and value to Ardagh's global packaging operations.
"The transaction would increase the size of our glass business globally by almost 60pc and be a very significant step in developing our operations in the US," he said.
The transaction would have to be signed off by regulators in the US but Ardagh said it was expected to close later in the year. It is the latest major acquisition in which the packaging giant has been involved in recent times.
In late August it confirmed the €721m acquisition of US-based packaging group Anchor Glass – the third largest container producer in the United States.
VNA, which has its headquarters in Muncie, Indiana, is the second largest glass container manufacturer in the US, serving the North American wine, food and beverage industries.
It produces about 9 billion containers annually from its 13 facilities located throughout the US and employs approximately 4,400 people.
VNA has annual revenues of about US$1.6bn (€1.2 billion).
Ardagh Group, based in Luxembourg, is a global leader in glass and metal packaging solutions, producing packaging for most of the world's leading food, beverage and consumer care brands.
It sold the Ringsend Glass Bottle Site in Dublin for €412m in 2006. The site was valued in 2011 by the Comptroller and Auditor General at just €45m.
Niall Wall, Ardagh Group chief executive, described VNA as an innovative business.
"It represents an excellent opportunity to provide our US customers with enhanced competitiveness and improved levels of service through the achievement of greater operational efficiencies," Mr Wall said.
Ardagh also announced that the deal will be funded by raising $1.45bn, partly in euro and partly in US dollars, equivalent to debt financing through the issue of Senior Secured Notes and Senior Notes.
The proceeds and sale of the notes would be used for the acquisition and associated costs.
Ardagh announced in the summer of 2011 that it was postponing a planned US stock market flotation that was expected to value the group at more than €2bn.
It had been expected that the amount raised by Ardagh in the IPO would have been relatively low and that the move was more about gaining a US listing rather than a major liquidity event. The company said it would wait until markets recovered, and speculation has intensified since as to when the company will make the move.
In a trading update, Ardagh said it expected revenue in the final three months of 2012 to have risen, while its metal packaging division would be flat or dip slightly.
Ardagh's annual report, released in August, showed that Mr Coulson and other top executives shared a total of €9.1m in pay last year.
The accounts also showed that it generated earnings before interest, tax, depreciation and amortisation (EBITDA) of €553.4m in 2011, more than double the €269.1m it generated the previous year as a result of acquisitions.
It made a pre-tax loss of €37.7m in 2011 compared with a €95.1m pre-tax loss the previous year.
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