Glass half full at Ardagh
THEY MAY be on hold for the moment, but Ardagh has not abandoned its intention to go back to the market. The group is due to close a €720 million deal in a few days and next week will publish results for the second quarter of this year.
It has been eyeing a flotation for the last 15 months, and has completed the first formal stages of its application to the US Securities and Exchange Commission (SEC).
The glass and metal container manufacturer plans to launch on the New York market rather than Dublin, where it
was once a mainstay of the Irish Stock Exchange.
Ardagh parted company from the Dublin market in 2003 in a spin-off orchestrated by Paul Coulson, who is now its chairman* and controller of 69 per cent of its shares. He cited the continuing failure of the market to properly value the company as the reason for his move.
At the time, commentators criticised the action as offering little to investors. An offer from the ill-fated Quinn group for some of its manufacturing assets was even seen as a boost for shareholders.
In the end, most investors stayed on board as the company was taken private and it looks like they made the right choice. In 2007, they shared in the €273 million that Ardagh’s spin-off, South Wharf, made from the sale of its old production site in Ringsend, Dublin. Coulson and his vehicle, Yeoman International, received almost 27 per cent of this figure.
In the past five years, they’ve seen the group take a huge step up and establish itself as major player in global food and drink packaging.
It is now heading for €4 billion a year in revenues, is ranked in the top three in most of its geographic and product markets, and at number one in northern Europe.
Its client list includes beverage giant, AB Inbev (brewer of Budweiser), Coca Cola, Heineken, Heinz, John West, L’Oréal, Pernod Ricard and Proctor Gamble.
Two acquisitions helped kickstart this. The first was its purchase of Rexam’s European glass manufacturing business in 2007 for €660 million, a move that doubled Ardagh’s revenues to €1.25 million.
The second followed in September 2010, when it bought Impress Co-operative for €1.7 billion from private equity player, Doughty Hanson, owner of Irish broadcaster, TV3.
Impress made metal containers, and its customers included food companies such as John West and Del Monte, and well-known operators in other sectors, including Crown Paints and household products manufacturer Procter Gamble.
The deal more than doubled Ardagh’s size for the second time – it went from a turnover of €1.25 billion a year to more than €3 billion, and its workforce jumped from 6,500 to in excess of 14,000.
Ardagh paid for Impress with the proceeds of a bond issue, consisting of notes worth €1 billion and $800 million. The following February it raised a further €200 million from capital markets and declared its intention to seek further purchases.