Sunday 18 March 2018

Ardagh group edges closer to €1.2bn deal for US acquisition

Paul Coulson
Paul Coulson
John Mulligan

John Mulligan

Paul Coulson’s Ardagh glass group has edged closer this morning to acquiring St Gobain’s US Verallia unit for an estimated $1.7bn (€1.2bn) after striking a possible deal with the country’s trade watchdog.

It could see it finalise the acquisition by mid-January.

Ardagh, where Dubliner Mr Coulson is executive chairman, has spent months trying to buy the glass manufacturing operation in the United States, having announced the planned acquisition in January.

It’s poised to be the second-biggest acquisition made by Ardagh, which is one of the world’s biggest manufacturers of glass and metal containers in the world. Its products are used in a diverse range of consumer products produced by household names from Heineken to Unilever. Ardagh has 100 manufacturing sites in 25 countries and employs 18,000 people. Mr Coulson is the majority owner of the business.

But the deal became mired over competition concerns and is being probed by the Federal Trade Commission (FTC), which has the power to prevent it going ahead. It sought an injunction to prevent the deal closing.

The FTC has claimed the Verallia acquisition by Ardagh would "hurt consumers nationwide".

"This combination would lead to higher costs for brewers and distillers and less innovation in the glass container industry.  Ultimately, this transaction will result in higher prices for consumers," the watchdog added.

Ardagh had offered to sell four of the newly-acquired glass plants in an effort to appease competition concerns.

But that wasn’t enough for the FTC.

However, Ardagh said this morning that it has now progressed negotiations with the FTC on a potential settlement of the Commission’s challenge to the proposed acquisition of Verallia North America (VNA).

"In connection with such negotiations, Ardagh will amend the package of plants it is currently selling," Ardagh said. "Any such sale will need to be approved by the FTC prior to any settlement being finalised."

"To enable Ardagh and the FTC to devote the maximum resources to the settlement process, Ardagh has agreed not to close its acquisition of VNA until either the Commission has approved a settlement or a decision on the merits is reached in the administrative litigation," it added.

"As a result of this agreement, the lawsuit filed by the FTC in federal district court has been stayed, and the preliminary injunction hearing has been cancelled. The parallel administrative proceeding has not been stayed, and the trial in that matter is scheduled to start on December 19, 2013."

Ardagh plans to conclude the settlement process with the FTC and close the acquisition of VNA before mid-January 2014, the company said.

Ardagh is currently the third biggest player in the $5bn US glass container industry. The acquisition would make it number two, behind rival Owens-Illinois.

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