French building materials company Compagnie de Saint-Gobain SA Monday said it has received a binding and irrevocable offer from Luxembourg-based packaging firm Ardagh Group S.A., to acquire its U.S. glass container manufacturing unit, Verallia North America, for an enterprise value of $1.69 billion or about 1.275 billion euros.
According to the company, the transaction values the glass bottles and jars producer Verallia North America 6.5 times 2012 earnings before interest, taxes, depreciation and amortization, or EBITDA of nearly $261 million. Following the offer, Saint-Gobain has entered into exclusive negotiations with Ardagh.
Pierre-André de Chalendar, chairman and CEO of Saint-Gobain stated, "The offer is a new milestone in Saint-Gobain's strategic refocusing on the habitat sector. It puts a high value on our North American containers business, above the multiples contemplated at the time of the planned IPO in 2011, while providing it with promising scope for industrial development."
Saint-Gobain intends to utilize the sale proceeds mainly to strengthen the Group's balance sheet, as well as pursuing its acquisition policy focused on small or medium-sized targets.
Muncie, Indiana-headquartered Verallia North America, with 13 plants located throughout the U.S., and about 4,400 employees, had 2012 revenues of $1.62 billion and operating profit of $171 million.
Verallia North America is the second largest glass container manufacturer in the U.S. The company said it recently strengthened Verallia's positions in Western and Eastern Europe.
"At the same time, Verallia's positions in Western and Eastern Europe, which were recently strengthened by a very promising operation in Algeria, together with its positions in growing Latin American markets, make it a global leader in its markets, with considerable cash generation and development potential," Chalendar said.
Saint-Gobain's decision to accept the offer will be based on consultation with the Works Council and their related opinion. The deal is also subject to authorization by the U.S. anti-trust authorities.
The offer is not conditional upon financing arrangements, Saint-Gobain added.
In October end, Saint-Gobain reported its third-quarter sales that increased 1.8 percent last year to 10.95 billion euros. At that time, the company said it expects its trading in the fourth quarter to remain subdued, after a difficult third quarter hit by gradual deterioration in the economic environment - particularly in Europe.
In Paris, Saint-Gobain shares are currently trading at 32.58 euros, up 0.86 euros or 2.73 percent, on a volume of 993 thousand shares.
by RTT Staff Writer
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