Ardagh bid for US glass-maker Verallia goes down to wire
Ardagh's planned $1.7bn (€1.2bn) acquisition of US glass business Verallia has gone down to the wire. There are just four days left before the Irish firm will have to repay $1.5bn in bonds it raised to fund the deal unless it secures the acquisition.
Headed and controlled by Paul Coulson (pictured), Ardagh has been battling the US Federal Trade Commission (FTC) over its planned acquisition of Verallia, which is owned by French industrial giant Saint-Gobain.
The FTC sought to block the deal -- which would have been Ardagh's second biggest acquisition -- in July. The watchdog complained that the Verallia purchase by Ardagh would "hurt consumers nationwide" in the United States as it would result in higher costs for drinks containers, and consequently the drinks consumers buy.
Ardagh rubbished the claim. It insisted that the picture the FTC painted of a "tacitly collusive" glass manufacturing sector in the United States was a "far cry from the truth".
Ardagh announced the deal to buy the Verallia operation in January last year. The Irish firm then raised a total of $1.5bn in bonds it planned to use to finance the acquisition.
Those dollar and euro-denominated bonds included a €250m issue with a 5pc coupon, or interest rate, a $420m bond with a 4.875pc coupon, and $850m with a 7pc coupon.
If Ardagh doesn't complete the Verallia acquisition by next Monday, it will have to repay the euro bond, the $420m bond and $700m of the $850m bond. It would then have to raise fresh debt to buy Verallia. However, it's expected that the deal still has a high chance of being completed in time.
In October, Ardagh offered the bondholders a fee to extend the mandatory redemption deadline from next Monday to July 13. But agreement wasn't secured by Ardagh.
To appease the FTC, Ardagh had originally offered to sell four of glass manufacturing plants. But that wasn't enough to appease the watchdog's competition concerns. But talks continued between Ardagh and the FTC to find an acceptable solution that would enable the Irish firm to consummate the Verallia deal. Ardagh has since offered to sell six US plants it acquired in 2012.
The FTC's legal counsel said it was "not prepared to recommend the settlement proposal to the commission at this time".
Ardagh entered the US market in 2012 when it acquired Anchor Glass and Leone Industries. It has 100 manufacturing sites in 25 countries and employs 18,000 people.
A spokesman for the company declined to comment yesterday.