Paul Coulson's Ardagh Group and a Canadian teachers' fund plan to put their food and speciality metal cans joint venture on the market next year, in a transaction that could put an enterprise value of more than $4 billion (€3.55 billion) on the business, including debt.
Investment bankers at Citigroup and Evercore have been hired to manage a sale of the joint venture, called Trivium Packaging, according to a recent report from Mergermarket, the online mergers and acquisition publication. A spokesman for Ardagh declined to comment.
Trivium, in which Ardagh has a 42 per cent stake, had $3.1 billion of borrowings at the end of September, according to its latest quarterly report.
Ardagh spun 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, to form Trivium.
Ardagh received $2.5 billion in cash as part of the transaction as well as a 42 per cent stake in the joint venture.
A sale of its remaining 42 per cent stake may be used to pay down debt either at Ardagh Group or holding companies above that level, according to observers. Part of the proceeds could also make their way to long-standing investors in the group, led by Mr Coulson.
Many small investors remained on board a precursor of the packaging giant, Ardagh Glass, when it was taken private in 2003 and opted to reinvest some of the cash they received two years later as management used a special-purpose vehicle to purchase all the stock in the business.
Flotation
Ardagh Group's flotation of its drink cans business, Ardagh Metal Packaging, on the New York Stock Exchange during the summer is also paying off for the same investors.
Some $1 billion of proceeds coming from that transaction are being paid up to group holding companies. More than $485 million of this is earmarked to repay debt, Ardagh said last week. However, up to the same amount is expected to be distributed to legacy shareholders.
That would bring total distributions, including share buybacks and special dividends, to the equivalent of about €1.25 billion over the space of a decade.
Trivium is likely to appeal to both private-equity firms and trade buyers, as the sector has become a hotbed for dealmaking.
For example, US packaging group Crown Holdings sold most of its European food cans unit earlier this year to investment firm KPS Capital Partners in a deal valuing the business at €2.25 billion. Another US packaging company, Sonoco, agreed on Monday to buy metal cans company Ball Metalpack for $1.35 billion.
