Saturday 22 July 2017

Coulson's Ardagh stake likely to be worth €750m

Flotation could value group at €2.2bn as company plans US listing by third quarter

Ardagh Group's largest shareholder Paul Coulson
Ardagh Group's largest shareholder Paul Coulson
John Mulligan

John Mulligan

Dublin financier Paul Coulson and his family could see their stake in packaging giant Ardagh valued at as much as €750m as the company prepares to list on the US stock market later this year. The move is likely to value the company at about €2.2bn.

Following significant speculation in recent months about its plans, Ardagh Group -- which is one of the largest manufacturers of glass and metal packaging containers in Europe -- confirmed yesterday it was hoping to become a publicly listed company later this year.

The flotation will also make a paper multi-millionaire of Ardagh chief executive Niall Wall, who owns 10pc of the company. His stake is likely to be valued at about €220m, while other executives will also be sitting on valuable nest eggs.

In a sparse statement of intent, the group said the offering was expected to be completed as early as the third quarter of this year.

"The number of shares to be offered and the amount proposed to be raised in the offering have not yet been determined," according to the statement.

However, one credit analyst familiar with Ardagh's operations, Jayanth Kandalam at Lucror Analytics in London, told the Irish Independent yesterday that it was "highly unlikely" that Ardagh would undertake the planned flotation for liquidity reasons, and that the amount raised could be quite low -- as little as €200m.

He added that the company was likely to have a market capitalisation of about €2.2bn, but the final figure could be €500m either side of that.

A €2.7bn valuation would value Mr Coulson's stake at closer to €900m.

"There are no details, but this is not, in my view, a liquidity move. It's just getting a foothold in the US market," he added.

However, he said that while the flotation offering may be low, he would not be surprised to see it increased if the markets continued to remain firm.

Mr Coulson and his family control about 34pc of Luxembourg-domiciled Ardagh.

The businessman took the Irish Glass company private in 2003 and since then has built the Ardagh Group into a major European player in the packaging sector.

Last year, it shelled out €1.7bn to buy can manufacturer Impress from private equity group Doughty Hanson -- an acquisition that doubled the size of Ardagh.

On a pro-forma basis, the combined Ardagh-Impress group delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of €555m last year on revenues of just over €3bn.

This year, EBITDA is likely to be about €580m.

Anke Rindermann, an analyst with ratings agency Moody's, told the Irish Independent she was not surprised Ardagh had announced plans for a primary listing in the US despite being a European-focused company.

"The US market is historically more perceptive to more leveraged companies," she said. Ardagh is highly leveraged following its acquisition of Impress.

Another analyst said the US market had comparable peers for Ardagh, something that was not the case in Europe.

Ms Rindermann added that historic valuations in Ardagh's sector had been observed at five to seven times EBITDA.

She said that depending on what the management's view was for the company, that figure could be higher; for example, if they believed there was a growth story there.

Irish Independent

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