25 March 1999: Ireland“s Ardagh Plc said recently that it planned to buy Britain“s Rockware, in a move the Irish company said would create the largest glass packaging group in Britain and Ireland.
25 March 1999: Ireland“s Ardagh Plc said recently that it planned to buy Britain“s Rockware, in a move the Irish company said would create the largest glass packaging group in Britain and Ireland. Ardagh said the UK 240 million (US$ 390.4 million) acquisition from US group Owens-Illinois would give it almost one third of the British glass packaging market and a strong position in Europe“s glass packaging industry. “The acquisition of Rockware will transform the Ardagh group into a major force in the glass packaging market,” its chairman Paul Coulson said in a statement. Coulson said that Ardagh would continue looking for suitable acquisitions in Europe. He predicted a wave of mergers and consolidation in an industry overburdened by excess capacity. “We see this as the first in a series of transactions which will lead to the consolidation of the industry…and we are in a position to go further,” he said. He also noted that Ardagh“s customer base was consolidating. “When Diageo (Plc) was formed, two of our biggest customers merged. We have to move with them now, and as they get bigger, they want to move across Europe. There is no future for us in being an isolated plant in an isolated part of Europe.” Ardagh said the deal, which combines Ardagh“s 40 million punt (US$ 57.35 million) annual turnover and single plant in Ireland with Rockware“s UK 166 million sales from four factories in Britain, amounted to a reverse takeover under Irish Stock Exchange rules. Investors hailed the deal, sending Ardagh shares more than 3% higher in Dublin to Euros 1.65 (US$ 1.81). Under the agreement, Rockware“s chief executive officer Eric Young would become deputy chairman of the enlarged company, which will have total production capacity of 815,000 tonnes per annum, Ardagh said. Ardagh is buying Rockware from US group Owens-Illinois, which bought the British company in 1998 as part of BTR Plc“s packaging businesses. However, Owens-Illinois already owned United Glass, which holds a major share of the British glass container market, and agreed with the EU to sell Rockware. Ardagh said Rockware was an attractive proposition, having benefited from a technology agreement with Owens-Illinois, giving it access to the latest developments in glass packaging product manufacture. Ardagh noted that more than 90% of its sales were within Ireland and the scope for expansion was limited. It said the two companies“ skills were complementary, with Ardagh“s expertise in short-run niche products keying well with Rockware“s focus on high-volume, large run production. Ardagh said it would fund the acquisition through an indirect injection of UK 38 million of equity into its British unit Ardagh Glass, and 114 million of senior debt facilities from Westdeutsche Landesbank. In addition, Ardagh will take on UK 70 million of subordinated debt from Owens-Illinois to meet the first UK 215 million tranche of the sale price and around seven million pounds of costs associated with the acquisition. A further UK 25 million is payable, deferred for seven years, the company said in the statement. Ardagh simultaneously announced its interim results in a statement. The company said it planned to raise around 10 million punts in a 10 for 33 share offer, by issuing 8.5 million shares at 1.20 punts per share. Pre-tax profit slipped 0.9% to 3.62 million punts in the 26 weeks to 30 December 1998, while turnover slipped 12.2% to 18.92 million punts.