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Moody’s give Ardagh credit for dropping Verallia bid

Ardagh was vying with a number of private equity giants to buy St Gobain’s European glass-making unit, Verallia, and analysts say the indebted group shows evidence of more financial discipline.

Irish-owned packaging group Ardagh’s decision to pull out of the race for St Gobain’s bottle and jar manufacturing division is good for its creditworthiness, according to ratings agency, Moody’s.
Ardagh was vying with a number of private equity giants to buy St Gobain’s European glass-making unit, Verallia, which is on the market for a reported EUR 3 billion.
However, the group, controlled by Irish financier, Paul Coulson said recently that it is withdrawing from the race. At the same time it is considering floating its metals division.
Moody’s, which assesses companies’ abilities to pay their debts, says in a note issued on Friday that the announcements are credit positive because they meant that Ardagh will not be seeking to borrow more money and they could result in it cutting its EUR 5.2 billion net liabilities.
Analysts Martin Chamberlain and Simon West point out that Ardagh paid for a buying spree that quadrupled the size of the business over four years with loans that now amount to around seven times its earnings.
They say that its decision not bid for Verallia is evidence of a “more disciplined financial policy” and, significantly, follows the repayment of EUR 180 million of senior debt earlier this year.
Mr Chamberlain and Mr West add that they understand that the flotation of the metals division is not linked to any further acquisition allowing the proceeds to be used to repay some of Ardagh Packaging Holdings Ltd’s debt.
Ardagh bought Verallia North America from St Gobain last year after protracted talks with the US competition regulator.
The group, which has its roots in the Irish Glass Bottle Company, supplies bottles and cans for Budweiser Beer and John West Salmon, amongst other leading food, drink and healthcare brands. It has businesses in 89 countries.

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