The newly formed Ardagh Metal Packaging (ticker AMBP) will become a 'pure-play beverage can business' and will have an enterprise value of around $8.5bn.
Ardagh Group S.A. – a global supplier of metal and glass beverage packaging – will retain an 80% stake in AMP and will receive up to $3.4bn in cash. Gores Holdings V is a special purpose acquisition company sponsored by an affiliate of The Gores Group, a global investment firm.
Headquartered in Luxembourg, AMP will have a particular focus on The Americas and Europe with 23 production facilities across these regions: supplying a 'diversified customer base of leading global, regional and national beverage producers'.
'Multifaceted growth opportunities'
Ardagh Metal Packaging says that “strong demand in traditional and new beverage categories, coupled with environmentally-conscious end consumers, are driving an inflection point in beverage can demand and the company is well positioned to capitalize on these multifaceted growth opportunities.”
It champions a ‘compelling financial profile, with a clear and tangible growth trajectory backed by long-term customer contracts,’ and expects to double Adjusted EBITDA from $545m in 2020 to over $1.1bn in 2024.
Ardagh Group boosted its metal packaging division in 2016 with its entry into the beverage can market, acquiring metal beverage can manufacturing assets and support locations in Europe, Brazil and the US for $3.42bn from Ball (as part of Ball’s acquisition of Rexam). The business currently employs around 4,900 people and recorded revenues of $3.5bn in 2020.
Paul Coulson, Chairman and CEO of Ardagh, said: “The business has grown significantly since our acquisition of the metal beverage packaging business in 2016 and we have a clear roadmap that we believe will lead us to more than double Adjusted EBITDA by 2024, as we invest in support of our customers’ growth.
"We are delighted to partner with Gores Holdings V to create a NYSE-listed pure-play beverage can business of scale with impeccable ESG credentials, and we intend to remain a committed, long-term majority shareholder of AMP as it continues its growth journey.”
The combined company is expected to have an enterprise value of approximately $8.5bn at closing, representing 10.5x AMP’s projected 2022 Adjusted EBITDA. Together with the cash held in Gores Holdings V’s trust account, additional investors have committed to participate in the proposed business combination by purchasing 60 million shares of AMP for an aggregate purchase price of $600m in a private placement (the “PIPE”) at $10 per share. As a first step in the transaction, AMP will raise new debt of approximately $2.65bn, (approximately $2.3bn net), representing a multiple of 3.3x of 2021E pro forma Adjusted EBITDA.
Assuming no share redemptions by the public stockholders of Gores Holdings V, approximately $525m in cash held in Gores Holdings V’s trust account, together with the $600m in private placement proceeds and approximately $2.3bn of the new debt raised by AMP, will be used to pay up to $3.4bn in cash to Ardagh, as well as to pay transaction expenses.
Ardagh will retain an equity interest in AMP of approximately 80%, the PIPE investors in the private placement will hold around 10% and Gores Holdings V’s stockholders and its sponsor will hold approximately 10%.
Oliver Graham, CEO of Ardagh Metal Beverage, will be CEO of AMP. Paul Coulson, Chairman and CEO of Ardagh, will serve as Chairman and Shaun Murphy, COO of Ardagh, will serve as Vice Chairman of the company following the closing of the transaction.
The transaction is expected to close in the second quarter of 2021, subject to receipt of Gores Holdings V stockholder approval and customary closing conditions. The transaction has been unanimously approved by the boards of directors of both Ardagh and Gores Holdings V.
Ardagh will retain 100% ownership of its glass packaging business as well as its 42% stake in Trivium Packaging BV. The cash proceeds from the transactions will be used to reduce net debt at Ardagh.