Dublin-based Ardagh Group and a Canadian teachers’ fund are said to be exploring for the second time in two years putting their food and speciality metal cans joint venture on the market, in a transaction that could put an enterprise value of more than $3.5 billion (€3.2 billion) on the business, including debt.
Dublin financier Paul Coulson (71) is the main shareholder in Ardagh, with an effective 36 per cent stake, and continues to be a board director after stepping down as executive chairman in November.
Ardagh spun out its food and speciality metal packaging business in 2019 into a joint venture with US-based rival Exal Corporation, which is owned by the Ontario Teachers’ Pension Plan Board (OTPPB), to form Trivium.
[ No rest for the Cooler after exiting the hot seat at heavily indebted ArdaghOpens in new window ]
Bloomberg reported this week that Ardagh, which owns 42 per cent of Trivium, and the Canadian pension fund are working with advisers to prepare for a possible auction of Trivium. The company is likely to attract interest from private equity firms and industry peers, it said.
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A spokesman for Ardagh, a glass and metal containers giant with more than $9 billion of annual sales that traces its roots to the long-since closed Irish Glass Bottle factory in Dublin’s Ringsend, declined to comment.
The deliberations come as Ardagh weighs how it is going to deal with $700 million of bonds falling due in April next year and the equivalent of a further $2.6 billion maturing in August 2026.
Two leading debt ratings agencies, Standard & Poor’s and Fitch, moved late last year to downgrade their views on the creditworthiness of Ardagh deeper into non-investment-grade territory, amid concerns about the group’s earnings outlook and rising debt-refinancing risks following a raft of central bank rate hikes to rein in inflation.
[ Ardagh chairman Paul Coulson to step downOpens in new window ]
A holding group at the top of the Ardagh corporate tree had a total of $11.7 billion of debt as of the end of September.
Ardagh and OTPPB looked in late 2021 at selling Trivium but subsequently abandoned the idea. The Bloomberg report said that Trivium and the Canadian pension funds declined to comment on the latest exploration of a sale.
Other cash-raising options could involve Ardagh selling shares in Ardagh’s New York-listed beverage can business, Ardagh Metal Packaging (AMP), which the group floated in 2021 through a reverse takeover of a publicly quoted cash shell. Ardagh continues to have a 76 per cent stake in AMP.
Ardagh lowered its 2023 earnings before interest, tax, depreciation and amortisation forecasts for both its glass containers and AMP units in October by as much as 10 per cent to a combined $1.31 billion, amid subdued consumer confidence and as drinks and food companies cut back orders to run down packaging stockpiles.
A slump in demand for Bud Light last year – after its owner Anheuser-Busch InBev’s use of transgender TikToker Dylan Mulvaney to promote the then top-selling US beer prompted a boycott of the brand – also led Ardagh to accelerate a planned closure of two bottle plants, in North Carolina and Louisiana.
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