US bank Warburg Pincus is expected to seal the purchase of Irish packaging group Clondalkin in the coming days.

The deal is expected to value the Dublin-based firm at close to €650 million, netting a handsome return for private equity group Candover Investments, which funded the management buyout of the company in 1999.

Clondalkin, which was put on the market at the start of last year, has been in discussions with Warburg Pincus for several months.

Candover funded the €385 million management buyout for an 85 per cent stake. The balance of the shares are owned by management, with chairman Mr Henry Lund and managing director Mr Norbert McDermott holding the largest stakes.

It is understood that Mr Lund, who led the MBO and was formerly chief executive at Clondalkin, will sell his shares as part of any deal.

Sources close to the company said management had been supportive of the decision by Candover to sell its stake. "Candover has worked very well with the company but the fact is that private equity partners tend to want to make their return within five years so it was probably time for both to move on," the source said.

Clondalkin management is thought to favour the Warburg Pincus approach because it will allow the group to expand its operations in the United States and possibly even Asia, where the US bank is stronger than Candover would have been.

Clondalkin has operations in Ireland, Britain, continental Europe and the United States but the US currently accounts for just a fraction of its turnover.

The group has performed strongly since it became the first listed Irish company to be taken private by management in 1999.

Its most recent figures show a pre-tax profit of €9.9 million in 2002 compared to a loss of €6.2 million the previous year despite stagnant sales of around €710.5 million.

A 44-strong group of company management participated in the MBO after Clondalkin took the decision to go private. At the time, it blamed the difficulties faced by smaller companies in attracting investors and bolstering their share prices following the Asian market slump of 1998. It also suffered as institutional shareholders began to diversify out of Irish stocks following the introduction of the European single currency in 1999.

Warburg Dillon Read was one of the banks involved in the financing of the original deal.