Ardagh cuts a $1.7bn deal for US giant

Glass and packaging group Ardagh has reached initial agreement to acquire Verallia North America — the second largest glass container manufacturer in the US — from French multinational, Saint-Gobain for around $1.7bn (€1.27bn).

The deal — which is dependent on agreement from the French group’s works council and US regulatory approval — is expected to be completed later this year and would, if successful, represent the Irish group’s biggest single deal since buying international metal packaging giant, Impress in 2010.

Verallia would also represent Ardagh’s third US glass purchase — the two previous ones, being New Jersey company Leone Industries and the Florida-based Anchor Glass Container Corporation — and significantly boost its share of the American glass packaging market past the existing 20% mark.

Of further significance, it would give Ardagh entry to the lucrative US wine sector and give it exposure to the west coast for the first time. It would also mean that roughly 40% of Ardagh’s group sales and earnings would be generated in the US.

Speaking yesterday, the group’s chairman, Paul Coulson said conclusion of a deal would mark “another important milestone in the evolution of Ardagh,” adding scale, diversity and value to the group’s global packaging operations. “The transaction would increase the size of our glass business, globally, by almost 60% and be a very significant step in developing our operations in the US,” Mr Coulson added.

“It represents an excellent opportunity to provide our US customers with enhanced competitiveness and improved levels of service through the achievement of greater operational efficiencies,” added Ardagh’s chief executive, Niall Wall. Ardagh is set to raise $1.45bn (€1bn) of debt financing, through the issue of senior secured and senior notes, to pay for the takeover and related costs.

Verallia is based in Indiana and mainly serves the North American wine, food and beverage industries; producing around nine billion containers per year from 13 facilities across the US. It employs around 4,400 people and has annual revenues of $1.6bn.

Ardagh has spent nearly €3bn on acquisitions since late 2010 and said yesterday, that three of those purchases — Anchor Glass, Leone Glass and Boxal Metal Packaging — will help fourth quarter, 2012, group revenues to show a year-on-year mid-single digit percentage increase and for combined (glass and metal packaging divisions) EBITDA to be marginally higher than the same quarter in 2011.