Saturday 24 February 2018

Coulson's Ardagh edges closer to €3bn buy

Paul Coulson of Ardagh PLC
Paul Coulson of Ardagh PLC
John Mulligan

John Mulligan

Packaging giant Ardagh, which is controlled by Dublin financier Paul Coulson, is edging closer to what would be its biggest ever acquisition - a €3bn purchase of a unit being sold by French industrial giant Saint Gobain.

Saint Gobain has effectively had its Verallia glass packaging unit up for sale for months, with Ardagh and international private equity giants among those in the running to buy it.

It's been speculated that it could fetch as much as €3bn and, if Ardagh is successful, it would be another transformative deal for group, which has its roots in Irish Glass.

First round bids for Verallia were submitted last week and a short-list of potential buyers is due to be drafted by next week. There's no certainty Ardagh will make that shortlist, with stiff competition for the Verallia business. However, it's likely to be key contender.

Ardagh succeeded in buying Verallia's division in the United States last year for €1bn after a protracted battle with the US Federal Trade Commission, which had voiced competition concerns. That forced Ardagh to agree to a number of concessions, including the sale of some US plants, to seal the deal.

That acquisition was the second-biggest ever made by Ardagh. Its biggest was the €1.7bn acquisition of Impress in 2010. It had been sold by private equity group Doughty Hanson. Impress had operations around the world.

Ardagh has had on-off plans for a number of years for a stock market flotation of the business. It pulled those plans in 2011 and then again in 2013, but in the meantime has racked up a huge €4.7bn debt pile as a result of its buying spree.

That might make investors such as bondholders uncomfortable with the thoughts that the company could be tap them again to fund an acquisition of Verallia.

Mr Coulson, who is chairman of Ardagh, told investors last year that Verallia represented the "final piece of consolidation within the glass industry".

Last month, Ardagh said that it's considering a stock market flotation of its metal containers business later this year. The unit could be valued at up to €2bn under such an initial public offering (IPO).

Ardagh would retain majority control of the division and would use the proceeds from the flotation, which would take place in the United States, to either reduce its debt or fund acquisitions.

It added that alternatives for its glass packaging business would be considered "in due course".

"The proposed Ardagh Packaging Holdings metal IPO will enable Ardagh to reduce leverage and put both its metal and glass packaging businesses in a stronger position to take advantage of opportunities for further expansion," Ardagh said in its financial report.

Ardagh's revenue rose 17pc to €4.7bn last year, with earnings before interest, tax, depreciation and amortisation (EBITDA), climbing 27pc to €782m.

However, it posted a loss of €391m after incurring €475m in exceptional charges related to impairments, finance expenses and a loss on the sale of some of its US plants disposed of as part of the Verallia North America acquisition.

The company operates 89 glass and metal container manufacturing facilities across 21 counties.

It estimates that in an average household, there will be at least six products in packaging produced by Ardagh.

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