Irish financier Paul Coulson's Ardagh Group, the metals and glass containers maker which floated on the New York Stock Exchange last month, may be tempted to return to European glass routes when planning its next acquisitive move.
As a series of brokers involved in Ardagh's initial public offering (IPO), which saw the company sell an initial 6.9 per cent stake for $308 million (€290 million), began to publish their research, Davy analysts said on Wednesday that Spanish glass container maker Vidrala and Swiss peer Vetropack may emerge as takeover targets for the group.
"The European glass sector in particular remains relatively fragmented, with the top three players – Verallia, Owens Illinois and Ardagh – controlling 57 per cent of the market," said the Davy analysts, including Flor O'Donoghue and Barry Dixon. "There are a number of players with single-digit percentage market shares, including Vidrala (9 per cent) and Vetropack (6 per cent), which could prove potentially interesting deals for Ardagh."
Acquisitions
Ardagh has completed 23 acquisitions, mainly financed through debt, since Mr Coulson invested in the company and took over as executive chairman in 1998, turning it into one of the largest glass and metal container manufacturers in the world. In the process, it closed down its original bottle plant in Ringsend in Dublin in 2002.
The group entered the metal food cans business in 2010 through its €1.7 billion of Netherlands-based Impress Group, before launching into the beverage cans industry last year through its largest-ever deal, the $3.4 billion purchase of assets from US rival Ball Corp and the UK's Rexam as they prepared to merge.
About 60 per cent of the group’s revenues and more than half of operating profits are now estimated to come from the metals business,
While Ardagh’s chairman has played down the prospect of major deals in the near term as the group continues to integrate the Ball-Rexam assets, he has been clear that the group will continue to acquire businesses and that having a stock-market quotation gives it another currency for transactions.
‘Outperform’ rating
Shares in Ardagh have gained 10 per cent since the IPO and are currently changing hands at more than $21. Davy has a $23.50 price target on the stock and ‘outperform’ rating.
Elsewhere, Deutsche Bank initiated coverage of Ardagh's stock this week with a 'buy' stance, while Goldman Sachs and JPMorgan gave it a 'neutral' rating.
Deutsche Bank said one of the biggest risks facing Ardagh is if Mr Coulson, who turns 65 later this month and owns about 33 per cent of the group, “were to separate himself from the business”. However, the investment bank said it doesn’t believe that the executive chairman has any such plans.
