One51 Canadian deal to value plastics group at about €500m

Plastics group One51 will have a market value of about €500 million on the basis of a deal it plans to carry out with two Canadian firms that own a minority stake in its largest division.

That would likely set a minimum price tag for the overall group if UK private equity CapVest, led by Cavan man Seamus Fitzpatrick, follows up a recent approach to buy One51 with a firm offer that would thwart the Dublin-based company's plans to float on the stock market in 12 to 18 months.

One51, which has 2,000 shareholders in Ireland, said on Friday that it plans to reorganise its structure and that of its North American plastics unit IPL, which makes everything from yoghurt pots to refuse bins, ahead of an IPO, which is currently its preferred way of "securing" value of investors.

The plan is centred on two Canadian firms, Quebec-based Caisse de Dépôt et Placement du Québec (CDPQ) and Fonds de Solidarité, swapping their 33 per cent stake in IPL for a direct stake in One51, the parent company.

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Grey market

A presentation distributed to shareholders and analysts in recent days notes that One51’s shares are worth €2.47 each, based on the value-to-earnings multiples of other European plastics companies. That equates to a 25 per cent premium to the price at which One51 shares are currently trading on a grey market in Dublin.

Following the issuance of fresh stock to satisfy a “swap-up” deal with the two Canadian firms, One51 would have an equity value of almost €500 million, according to analysts who have seen the presentation documents. That’s based on the new stock being priced in accordance with an existing agreement between One51 and the two Canadian firms at valuation multiples slightly below the current European average.

It would result in CDPQ, which acquired an initial 25 per cent stake in One51 in May from businessman Dermot Desmond, increasing its holding to more than 34 per cent, while Fonds de Solidarité would end up with a 7.3 per cent interest, according to the documents.

Efficient

The presentation indicates that the logic behind One51 taking 100 per cent ownership of IPL includes freeing up cash flows that are currently “ring-fenced” within the unit. It would also make the group’s use of capital more efficient.

Spokesman for One51 and CapVest have declined to comment on the UK firm’s approach for the plastics company, which was first reported by the Sunday Business Post over the weekend. CapVest made an abortive attempt to buy the company for about €280 million a little over two years ago.

One51 said earlier this week that its plans to float the group is the best way to “secure” value for shareholders, even as the company occasionally receives “speculative and highly conditional” bid interest.