The company that makes the aluminum cans utilized by LaCroix, White Claw and other beverage giants is spinning off that business in a deal that values the new company at $8.5 billion, in accordance with a number of people with information of the plan.
The deal by Ardagh Group, which is based in Luxembourg, could be within the form of a merger with a special-purpose acquisition vehicle, or SPAC, backed by an affiliate of the Gores Group, the California private fairness agency. It could possibly be introduced as quickly as Tuesday, said the people, who spoke on the situation that they not be named as a result of the negotiations are confidential.
It’s a wager on the continued growth of the can business, as companies more and more weigh the environmental penalties of their merchandise. Nestlé announced the sale of its water business for $4.3 billion this month, in part a transfer to shift away from water packaged in plastic. Aluminum cans are far simpler to recycle than plastic bottles.
The Gores SPAC, named Gores Holdings V, is the seventh such deal the group has done.
Ardagh will retain a roughly 80 p.c stake within the company after the deal. Investors are contributing a $600 million private placement, whereas Gores is placing in $525 million in money. The new company, Ardagh Metallic Packaging, will situation $2.65 billion of new debt.
Ardagh generates more half its roughly $7 billion in annual sales from making cans for beverage companies. This previous 12 months, sales by the unit grew 2 p.c, fueled by beverage sales and environmental awareness, whereas earnings earlier than interest tax depreciation and amortization grew 8 p.c. Ardagh will keep its glass packaging business.
For beverage companies, cans have turn out to be an more and more important instrument for branding, providing colourful and glossy packaging.
When Ardagh acquired its canning operation in 2016 for $3 billion, it did most of its business with legacy brands like giant soda and beer companies. It has since labored with youthful and faster-growing seltzer-based brands like White Claw, LaCroix and Actually Exhausting Seltzer to help charge its growth. To organize for additional expected expansion within the United States, it purchased a manufacturing facility in Huron, Ohio.
Globally, the company is eyeing growth in Europe and Brazil, where beer sales remain strong as shoppers are more and more shifting from faucet to cans.