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How quickly can Apollo finalise the Verallia deal?

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June 10, 2015

Private equity firm Apollo has won the bidding war to enter exclusive talks to buy glassmaker Verallia. The firm has reportedly made an offer which would value Verallia at €2.95 billion.

Glassmaker Verallia has entered exclusive talks with private equity firm Apollo Global Management. The private equity firm is hoping to buy Verallia in a deal which would value the company at €2.95 billion. Apollo was able to put off a number of other potential bidders for the right to negotiate a deal with glassmaker.

Beating Competition

The US-based private equity firm was bidding for the famous glassmaker together with four other bidders. According to Reuters, three other private equity funds – Blackstone, CVC Capital Partners and Ardian – were looking to buy the company.

On top of this, the Portuguese industrial group, Ba Vidro, was interested in Verallia. But Saint-Gobain said the company chose to continue talks exclusive with Apollo because of its “support for the industrial project and for Verallia’s employees”.

The company is part of the Saint-Gobain group and the unit is most famous for the glass bottles and jars it provides for France’s champagne and cognac industries.

Streamlining Operations

Saint-Gobain is looking to sell the glassmaker in order to streamline its business operations. The company is set to focus more on its main business of construction and building materials.

The company has been trying to sell the company since 2007 and it had tried to list the company in 2001. The flotation proved unsuccessful and Saint-Gobain ended up selling the North American part of Verallia to Ardagh Group.

The unit generated €2.391 million in net sales and €230 million in operating income last year. It currently employs close to 10,000 people in its 47 plants and Verallia has operations in 13 countries.

Packaging News quoted the chairman and chief executive officer of Saint-Gobain, Pierre-André de Chalendar, saying, “The sale of Verallia would complete Saint-Gobain’s strategic refocus on the design, manufacture and distribution of innovative, high-performance solutions for the habit and industrial markets, on which the Group continues to develop”.

Last October, Saint-Gobain announced rest of the glassmaker is on sale, with Apollo now set to acquire the company.

Details of the Possible Deal

As Apollo and Verallia have only recently entered the exclusive talks, details of the deal remain unknown. It is thought the private equity firm has made an offer, which would value the company at €2.95 billion.

It is thought Saint-Gobain would use the deal’s proceeds to reduce its debt after tax and to pay worker pension costs.

Furthermore, the deal could be closed before the end of the year. The deal is subject to regulatory clearances.

Apollo has strong background in investing in French companies. It recently invested in the debt-laden aircraft equipment manufacturer, Latecoere.

According to the Financial Times, Apollo’s management team said the company is an “outstanding franchise and one of the world’s leading packaging companies”. They continued stating, “We look forward to partnering with management and its tremendous employee base to support the continued growth and innovation of Verallia”.

If the deal is to go through, it marks yet another successful bidding war win for the private equity firm.

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