Ardagh Glass to pay €1.7bn for can-maker27/09/2010
DUBLIN-BASED manufacturing group Ardagh Glass, which is controlled by businessman Paul Coulson, has agreed to buy the metal packaging company Impress Co-operative from private equity firm Doughty Hanson for €1.7 billion.
The new combined group, which will trade as Ardagh Packaging Group, will have sales in excess of €3 billion and will employ more than 14,000 people across five continents.
Ardagh Glass is the largest glass manufacturer in the UK and the third-biggest player in Europe, while Impress is the number two can manufacturer in Europe as well as the world’s biggest seafood can-maker.
It manufactures cans for household names such as John West, Del Monte, Crown Paints and Proctor Gamble.
Mr Coulson described the deal as “transformational” and said it would give Ardagh a global reach and scale.
“The acquisition of Impress will enable Ardagh to become a major force in world packaging,” he said.
The enlarged group will operate 81 facilities across 24 countries, according to Ardagh chief executive Niall Wall.
Ardagh plans to offer €1.7 billion in bonds in order to fund the acquisition.
Following the announcement of the Impress deal on Saturday, Ardagh begins an investor roadshow today for the offer of secured and unsecured notes in euros and US dollars.
The offer, which is being fully underwritten by investment banks Citi, Credit Suisse and JP Morgan, is expected to be priced later this week. As part of the refinancing, Ardagh will pay off the money it owes to Anglo Irish Bank – €380 million.
Citi is acting as financial adviser to Ardagh in relation to the transaction. The acquisition is conditional on approval from both European Union and US competition authorities.
London-based Doughty Hanson said the sale would return €688 million to investors in certain private equity funds run by the group.
Doughty Hanson formed Impress in 1997 when it merged French and German packaging businesses, and in 2000 the company bought the US can-making assets of HJ Heinz Co. Its holding company is based in the Netherlands.
Doughty Hanson is also one of a number of parties that has expressed an interest in buying EBS building society.
As well as widening Ardagh’s geographical footprint, the deal also reduces its sectoral exposure to the beverage industry. As Impress largely operates in the food sector, the deal allows Ardagh to diversify from its core business of providing glass packaging for beer companies.
Sixty per cent of the revenues of the combined entity will be generated from the food sector, while two-thirds of the business will be located in Europe.
The deal is a defensive one for Ardagh as the food industry tends to be less prone to swings in the economic cycle than the beverage sector, which will now account for proportionately less of its business.