Ardagh to sell Anchor for $500 million

Ardagh Group is likely to make just under $500 million (€362m) with the sale of six US glass-manufacturing plants to private equity fund KPS Capital Partners.

The Paul Coulson-led packaging group last week took over US rival Verallia North America (VNA) for €1.3 billion after agreeing with regulators that it would sell six plants that formerly belonged to Florida-based Anchor Glass Container, which it acquired in 2012.

Ardagh confirmed yesterday that it has entered a "definitive agreement" to sell the six plants and a number of related assets to KPS Capital Partners – the owner of Waterford Wedgwood – subject to customary conditions and the approval of US mergers and competition watchdog, the Federal Trade Commission.

Neither side revealed the price that the private equity player has agreed to pay, but the deal is understood to be worth just under $500 million, broadly in line with industry norms.

The six plants Ardagh is selling produce glass bottles for the drinks industry – one of Anchor’s customers is Budweiser-maker Inbev – and generate revenues of $565 million a year and cash of $103 million.

Infrastructure
Ardagh paid $880 million for Anchor Glass in 2012. The business consisted of eight manufacturing plants, as well as a head office and other infrastructure.

Under the terms of the deal it is selling six factories in Florida, Georgia, Indiana, Minnesota, New York and Oklahoma, as well as an engineering, spare parts and mould manufacturing facilities. The sale is likely to go through in either the second or third quarter of the year.

Anchor's chief executive Jim Fredlake welcomed the news, saying the company was looking forward to becoming an independent operator under KPS's ownership.

One of the fund's partners, Jay Bernstein, said Anchor Glass represented a "tremendous" opportunity.

“Our investment is the first step in creating a thriving enterprise in the glass packaging industry, and we intend to aggressively grow the Anchor Glass platform both organically and through acquisitions on a global scale.” .

KPS manages about $6 billion of its investors’ funds and specialises in buying established manufacturing businesses with sales of at least $400 million a year. It generally limits itself to deals worth up to $1 billion, but will consider larger transactions as a co-investor.

Just over five years ago KPS bought Irish luxury goods group Waterford Wedgwood out of receivership. The move signalled the end of large-scale crystal production in Waterford, although the group retains a factory and visitor centre in the city.

Factories
Following the acquisition of VNA and the sale of Anchor, Ardagh said its North American glass manufacturing business would have sales of $2 billion a year from 16 factories employing 5,000 people.

Mr Coulson owns 36 per cent of Luxembourg-based Ardagh, which has a large number of Irish shareholders.

The company is one of the biggest glass and metal container manufacturers in the world, supplying everything from tins for John West salmon to Heineken beer bottles.