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Ardagh boxes up Anchor Glass deal

by Jonathan Braude | Published July 18, 2012 at 9:17 AM

Ardagh Group SA, a global glass and rigid packaging manufacturer with its roots in Ireland, agreed Tuesday, July 17, to acquire U.S. glassmaker Anchor Glass Container Corp. and massively increase its North American glass operation, for a total of $880 million.

The deal provides an exit for Wayzata, Minn.-based private equity and hedge fund manager Wayzata Investment Partners LLC, which bought Anchor in 2006 following its third bankruptcy in less than a decade, and backed it through its subsequent restructuring and turnaround.

Wayzata was not immediately available for comment but Ardagh, which is registered in Luxembourg, said the acquisition would increase the size of its glass business by almost 50% and would mean that approximately 25% of Ardagh's overall Ebitda would be generated in the U.S.

"The transaction is an important milestone in the evolution of Ardagh, as it will add scale and value to our global packaging franchise," said Ardagh chairman Paul Coulson in a statement.

Ardagh said it will finance the deal with $920 million of debt financing in dollars and euros. It will raise the debt by issuing $700 million of senior secured notes due in 2017 and $220 million of senior notes due in 2020 but is committed to raising equity as soon as practicable after the transaction closes.

It said it intends to seek a market listing, subject to market conditions.

Tampa, Fla.-based Anchor has a checkered history, having changed hands several times in the past 15 years and moving in and out of bankruptcy protection. The company was initially carved out of Anchor Hocking Co. in 1983 by Wesray Capital Corp., a private equity pioneer co-founded by William Simon, U.S. Treasury secretary in the Nixon and Ford administrations. Wesray later took Anchor public.

In 1989 Anchor Glass was acquired in a hostile takeover by Mexican glassmaker Vitro SA de CV. By 1997 Anchor Glass was seeking bankruptcy protection before most of its assets were sold to Canadian competitor, Consumers Packaging Group Inc. In 2002 it again filed for Chapter 11 bankruptcy protection and then accepted an offer from Cerberus Capital Management LP, which took it public again; Wayzata subsequently took it back into private ownership.

Ardagh, which provides metal and glass packaging for most of the world's biggest food, beverage and consumer-care brands, said it will operate 100 facilities in 25 countries, employ 17,700 people and have global sales in excess of €4.1 billion ($5 billion) after the transaction.

Citigroup Inc. acted as financial adviser to Ardagh and provided financing for the transaction, while Ardagh turned to Shearman & Sterling LLP for legal advice. A Jefferies & Co. team including Robert Bayer was financial adviser to Anchor Glass, with Kerry Berchem leading a legal team from Akin Gump Strauss Hauer & Feld LLP providing legal counsel.

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