Ardagh metal unit could be worth €2.5bn on flotation
Published 05/08/2015 | 02:30
The metals unit of Ardagh, the packaging giant controlled by Dubliner Paul Coulson, could be worth as much as €2.5bn when it hits the stock market this year.
Higher earning have boosted the metals unit's prospects ahead of a listing debut.
Second-quarter results released by Ardagh yesterday show that earnings before interest, tax, depreciation and amortisation (EBITDA) at the metals division of the global packaging firm rose 36pc year-on-year to €80m in the period. On a constant currency basis, they were 33pc higher.
Ardagh, which traces its roots back to Irish Glass, said that the second quarter growth was down to improved efficiencies and cost reductions in its European metals unit, combined with volume growth generated by new North American plants.
Ardagh, whose customers include globally-recognised household names such as Heineken, L'Oreal, Danone and Heinz, announced plans earlier this year to float its metals unit.
If the flotation goes ahead, Ardagh will retain control of the newly-listed company, and Mr Coulson will be appointed chairman. He's currently the executive chairman of Ardagh.
A valuation of the metals unit, based on a planned takeover of container maker Rexam in the UK this year, is roughly based on nine-times EBITDA. In the 12 months to June, Ardagh's metal unit generated EBITDA of €281m.
Ardagh's other senior management include brothers Niall Wall, who's the group's chief executive, and David Wall, who heads its metals unit. They are both brothers-in-law of Mr Coulson.
Ardagh recently established a company called Oressa, based in the UK, which will be used to acquire the metals unit from Ardagh with the aim of floating the business in the United States. Ardagh said it aims to raise approximately €2bn in proceeds from combined the debt and equity issuance by Oressa.
The metals division, which operates 54 facilities in 20 countries, generated revenue last year of €1.85bn and adjusted EBITDA of €246m.
Most of its revenue, 85pc, is currently generated in Europe, with food, seafood and aerosols being the biggest categories for which it makes containers.
Last year, Ardagh invested $200m in two new can-making facilities, in Virginia and Reno, and expanding a facility in New York.
Oressa said that it intends to expand in the future via acquisition and that such transactions could be acquired with "modest equity and relatively high levels of financial leverage".
Ardagh noted in its quarterly report that it has so far spent €6m preparing for the initial public offering of its metals division.
Revenue at the group rose 2pc to €1.3bn in the second quarter, while EBITDA was up 15pc at €249m.