Business World

Tuesday 20 August 2019

Ardagh's food packaging tie up will be used to slash debt

Ardagh CEO and chairman Paul Coulson. Photo: www.doug.ie
Ardagh CEO and chairman Paul Coulson. Photo: www.doug.ie
Ellie Donnelly

Ellie Donnelly

Global packaging giant Ardagh is to combine its food and speciality metal packaging business with Exal Corporation to create a new joint venture called Trivium Packaging.

The move, which remains subject to various approvals including competition clearance, will create one of the largest metal packaging companies in the world.

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United States-based Exal is controlled by Ontario Teachers' Pension Plan Board in Canada. It will own 57pc of Trivium, with 43pc owned by Paul Coulson's Ardagh Group.

Ardagh will receive approximately $2.5bn (€2.2bn) in cash proceeds, which it plans to use to reduce its $8.1bn of debt.

That's expected to see Ardagh's leverage cut by a "half a turn" from 5.2 times to 4.7 times earnings.

Analysts at Davy Stockbrokers described the deal as "a significant development", and said proceeds will equate to 30pc of Ardagh's net debt.

Trivium will be headquartered in the Netherlands and will operate 57 production facilities, mainly across Europe and the Americas, employing around 7,800 people.

On a pro-forma basis, Trivium's revenues and adjusted earnings before interest, taxation, depreciation and amortisation in the 12 months ended March 31, 2019 were $2.7bn and $469m respectively.

In addition, the company expects to derive net combination benefits of approximately $40m over the next few years.

Mr Coulson is the chairman and CEO of Ardagh and will become the chairman of Trivium. He said the units to be merged are highly complimentary.

"Trivium has the products, customers, innovation capabilities and leadership team to deliver continued growth and success, as brand owners and consumers increasingly seek sustainable packaging solutions," he said.

The current Exal chief executive Michael Mapes will become CEO of Trivium.

The new company will provide packaging to a range of multinational, regional and local customers in sectors including food, personal care, household care and beverages.

Ardagh has grown through a series of acquisitions under Mr Coulson's leadership.

Among these was the takeover of UK glass manufacturer Rockware in 1999.

This was followed by the purchase of Rexam's glass division for €660m in 2007.

In 2011, Ardagh paid €1.7bn for metal packaging group Impress.

This was followed a year later by the $880m takeover of Anchor Glass, while in 2013, Ardagh paid $1.7bn for the US glass packaging arm of Verallia.

Ardagh will use the proceeds of the deal to repay drawings under its current asset-backed loan facility by $150m; to close derivative positions of approximately $5m to $10m and to redeem bonds due in 2023 and 2024.

Irish Independent

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