PACKAGING GROUP Ardagh has announced a deal to buy a north American rival for $880 million (€721 million), marking the company’s third major takeover this year.
Dublin-based Ardagh said yesterday it had agreed to acquire the Tampa, Florida-headquartered Anchor Glass Container Corporation in an all-cash deal which it plans to finance with $920 million of junk bonds. Excess cash raised by the new bonds would be used to refinance existing debt.
Earlier this year Ardagh completed an €85 million take over of Boxal, the European division of Exal Corporation. Boxal manufactures aluminium bottles, used mainly for drinks, and aerosols for perfumes and cosmetics.
A short time later the company paid €170 million for Bridgetown, New Jersey-based Leone Industries, another glass container manufacturer.
In 2010, Ardagh raised €1.7 billion to purchase Impress, Europe’s second largest tin-can maker.
In a statement, Ardagh chairman Paul Coulson – who reportedly owns 33 per cent of the company – described the Anchor deal as “an important milestone”.
“The acquisition of Anchor will increase the size of our glass business by almost 50 per cent and is a very significant step in developing our operations in the US.”
Anchor Glass produces 5.6 billion containers annually at eight facilities across the US and generates annual revenues of approximately $800 million (€656 million). The Anchor deal brings Ardagh’s share of the US glass container market to 23 per cent.
Shortly after the deal was announced, Moody’s affirmed Ardagh’s B2 credit rating, but changed its outlook to negative from stable. The ratings agency said the change reflected its view that the Anchor acquisition was “credit negative”.
“This assessment is substantiated by the expected increase in net debt by about $920 million as a result of the transaction, underlining management’s aggressive financial policy dedicated to growing the group,” the agency said, adding: “Ardagh’s existing business lacks expected improvements in profitability as the sluggish macroeconomic situation in Europe results in continued volume weakness.”
Moody’s said it viewed the Anchor acquisition as “positive” in terms of the Ardagh group’s business profile, pointing to the company’s now “material share” of the US glass container market which, it said, would contribute to “increased scale and better diversification of the business”.
In its statement Ardagh said it was “committed to raising equity as soon as practicable” once the Anchor deal has closed, adding that it intended to seek a public listing “subject to market conditions”.
No Ardagh spokesperson was available for comment following the announcement. However, it is understood the company started the process of listing in the US last year, but that the euro zone crisis led management to reconsider.
Ardagh started as the Irish Glass Bottle company and was delisted from the Irish Stock Exchange in 2002. The company employs 14,000 people in 25 countries, operates 88 manufacturing plants and has annual sales of more than €3.2 billion. This year Ardagh said it was planning to build a low-cost glass manufacturing facility in the Republic.
