Luxembourg-based Ardagh Group has agreed to acquire Consol Holdings, its rival and South Africa’s biggest glass-packaging manufacturer, for an equity value of R10 billion, it said on Friday.
Founded 75 years ago, Consol produces packaging for the food and beverage industries inclusive of the beer, alcoholic fruit beverage, wine, fruit juice, soft drinks, mineral water and spirits markets. It operates production facilities in South Africa, Kenya, Nigeria and Ethiopia.
The deal is expected to expand Ardagh’s footprint on the African continent.
Commenting on the transaction, Ardagh’s chairman, Paul Coulson, said Consol was a market leader in the region, with great relationships across a diversified domestic and multinational customer base.
“Virtually all of Consol’s multinational customers are also customers of Ardagh. We look forward to welcoming Consol to the Ardagh family and to investing in the long-term growth of the African market, driven by consumer trends and rising sustainability awareness,” Coulson said.
Ardagh said it anticipated financing the acquisition through a combination of its own cash resources and the assumption of R5.7bn existing net debt at Consol. Completion of the acquisition is subject to certain conditions, including regulatory approvals that are expected to be obtained in the second quarter of 2022.
In the year to June 30, 2021, Consol reported R9bn in revenues with South Africa representing 90 percent of revenues, with the balance represented by smaller production facilities in Kenya, Nigeria and Ethiopia.
“Glass consumption in Consol’s markets is projected to continue to increase, driven by long-term trends, including population growth, rising income levels and shifts to premium one-way sustainable glass packaging,” said Consol.
Coulson said, “We are very pleased to expand our European and North America presence in glass packaging into Africa with the acquisition of Consol, a high-quality business, led by an excellent management team. Consol is a market leader in the region, with great relationships across a diversified domestic and multinational customer base.
Bruce MacRobert, the chairman of Consol, said: “The Consol team has built a great business, with an established reputation for delivering quality products to a growing customer base. Ardagh’s long-term presence in, and commitment to, glass packaging, makes it the ideal owner to continue this progress.”
Consol said it would await final regulatory approvals before offering any further comments or details on the proposed transaction.
Consol reportedly said the glass industry spent R8 million a day to keep its furnaces on and to keep production running at the height of Covid-19 lockdowns.
BUSINESS REPORT