Ardagh eyes flotation by end-March after 24% earnings jump

Ardagh Group executive chairman Paul Coulson expects the glass and metal containers maker to float on the New York Stock Exchange by the end of March, after it delivered a 23.9 per cent surge in operating earnings last year.

Plans for the long-awaited initial public offering (IPO) were “well advanced” and the company would “very shortly” update its filings with the US Securities and Exchange Commission, Mr Coulson told analysts on Thursday afternoon. The company initially only plans to sell about $300 million (€283m) of shares, which analysts say equates to less than a 5 per cent stake.

The group may have a market value of between €5.3 billion and €6.7 billion, according to David Holohan, chief investment officer at Merrion Capital in Dublin, based on its €7.2 billion net debt and valuations elsewhere in the sector.

Ardagh said its 2016 earnings before interest, tax, depreciation and amortisation (Ebitda) rose to €1.16 billion from €934 million, boosted by the group's $3.4 billion (€3.2bn) acquisition at the end of June of a beverage cans operation. The business was sold by US packaging group Ball Corp and UK peer Rexam to appease competition authorities as they merged.

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Ardagh’s sales rose to €6.34 billion from €5.2 billion year-on-year.

IPO plans

Mr Coulson (64), who took Ardagh private in 2003 and owns about 36 per cent of the business, has been aiming to return it to the stock market since 2011. Ardagh, which traces its roots to the formation of the Irish Glass Bottle Company, has been transformed by a series of acquisitions over almost two decades.

It is now one of the world’s largest makers of glass bottles and metal containers, with almost €8 billion of annual sales, assuming a full-year benefit from the Ball-Rexam assets it acquired in 2016.

The group’s total debt rose to €8.2 billion at the end of December from €6.4 billion a year earlier. However, its €772 million cash position helped bring its net debt down to €7.2 billion.

Proceeds from the share sale will be used to pay down debt, though the company continues to eye potential acquisition targets, Mr Coulson said.

Ardagh will pay an annual dividend of €135 million. Still, only €25 million of this will go to ordinary shareholders, as the remainder will be used to pay high-cost debt issued by the company’s parent holding company.

Almost 59 per cent of the group’s revenues and half of its Ebitda came from the enlarged metal packaging business during the last three months of 2016.

Consolidation

The company said in its latest report that consolidation among some of its largest customers, with food giant Kraft having merged with Heinz and brewer InBev taking over rival SABMiller in the past two years, has increased concentration of its sales. Such consolidation may lead to pressure from customers for lower prices, it said.