Ardagh set to begin €3.2bn flotation

IRISH-BACKED packaging giant Ardagh will this week take the first steps to floating at least some of the €3.2 billion-a-year business on Wall Street later this year.

The group, a world leader in food and drink packaging, announced yesterday that it intends to inform the US markets regulator, the Securities and Exchange Commission (SEC), of its intention to complete an initial public offering of its shares and to list Ardagh in the US.

“The offering is expected to be completed as early as the third quarter, subject to regulatory clearance and market conditions,” Ardagh said in a statement.

“The number of shares to be offered and the amount proposed to be raised in the offering have not yet been determined.”

The group said it intended to use the money raised to clear part of its €2.6 billion debt, fund possible acquisitions, provide working capital and other general corporate purposes.

Last October, Ardagh placed €1.1 billion and $800 million (€587 million) worth of bonds with international institutions to finance its €1.7 billion take over of Impress Co-operative and to repay a €380 million loan from State-owned Anglo Irish Bank.

It raised a further €200 million through another bond sale earlier this year. Following that, it announced the purchase of Italian rival, Fi Par, for €125 million.

As a result of these deals, the company has nearly trebled in size, expanding from a business with €1.2 billion a year in sales and 6,500 employees in October to one with €3.2 billion-a-year in revenues and 14,100 staff.

After it completed the Impress takeover, the group had debt totalling €2.6 billion.

Ardagh manufactures glass bottles and containers, and metal packaging such as tins, used mainly by the food processing industry. It packages products such Heineken beer, John West salmon and Del Monte fruit.

Irish businessman Paul Coulson is the group’s biggest shareholder, but its investors also include financial institutions and private individuals.

Over the last decade, it has delisted from the Irish Stock Exchange, and closed its manufacturing operations in this country. Ardagh itself was spun off and a new company, South Wharf, held on to the Irish assets.

South Wharf sold Ardagh’s old glass bottle site in Ringsend for €412 million to a consortium that included the State, the Dublin Docklands Development Authority and developers Bernard McNamara and Derek Quinlan in 2007. The sale was one of the higher-profile deals done during the property boom. The site remains undeveloped and is now under the control of State agency Nama. It is worth between €40 million and €50 million.

Shortly afterwards, the company bought British-based glass manufacturer Rexam, which, in itself, doubled Ardagh’s size. It already owned another British producer manufacturer, Rockware, which Ardagh had purchased during the 1990s.

After Ardagh completed the Impress deal and signalled it would make further, “bolt-on” acquisitions, there was some speculation it would bid for the glass manufacturing operations of the troubled Quinn Group.

Ardagh and Quinn Glass are old rivals and compete with each other in the British market. Ardagh has consistently opposed Quinn’s plans to build a large glass manufacturing plant in Cheshire.

There could be regulatory barriers to any deal involving the two companies, however. Anglo Irish Bank and a group of bondholders recently took control of Quinn Glass, along with the rest of that group.

Mr Coulson bought into Ardagh in the 1990s, and was appointed chairman soon after. At the time, the company was the sole manufacturer of glass bottles and containers in the Republic, and generated substantial cash. Mr Coulson used these resources to begin the group’s expansion in Britain and Europe, before organising its delisting and restructuring.