FTC balks on Verallia sale

The Federal Trade Commission has issued an administrative complaint that could block the sale of Verallia North America to Ardagh Group, a Luxembourg-based company with roots in Ireland.
Saint-Gobain, parent company of Verallia, accepted an offer from Ardagh in January to sell the glass container manufacturing company for $1.694 million.
But the FTC’s complaint filed this week alleges that the deal would be anti-competitive for the glass bottle industry.
A Verallia-operated plant in Dunkirk that produces approximate 2.5 million longneck beer bottles per day, the plant has been the focus of significant capital investment by Saint-Gobain over the past 15 years.
The FTC indicated it would be filing a petition in U.S. district court seeking a preliminary injunction to prohibit the closing of the sale until a decision can be made on its complaint.
“Ardagh is disappointed in the action that the commission has taken,” Ardagh Group said in a formal statement. “We believe that the transaction will benefit glass container customers and is fully consistent with the antitrust laws. Ardagh intends to vigorously defend the transaction in litigation, whilst at the same time working with the FTC to seek to resolve its concerns.”
By acquiring Verallia, Ardagh Group would control 50 percent of the North American glass container market. Some analysts voiced concerns about antitrust issues in January.
Saint-Gobain also said it would “vigorously defend the transaction,” in a prepared statement.
Ardagh Group’s offer for Verallia represented 6.5 times EBITDA (earnings before income taxes, depreciation, and amortization).
Saint-Gobain has been seeking to spin off its glass container business for at least two years but had shelved its plans because of the weakness of the Euro.
If the deal goes through, it would allow Saint-Gobain to reduce its debt and concentrate on its more profitable sheet glass production business.
In the most recent year for which figures are available, Muncie-based Verallia North America had sales of about $1.61 billion and posted an operating profit of $171 million. It has 13 industrial sites in the U.S., including its glass bottle production plant in Dunkirk.
Ardagh, founded in Dublin in 1932 as the Irish Glass Bottle Company, operates in 26 countries and employs 22,000.
It has annual sales of about $5.4 billion.
In July 2012, Ardagh Group bought Anchor Glass Container Corp. for $881 million.[[In-content Ad]]