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Tue, May 26, 2020 02:35
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Management Side
Sponsors line up against Visy in $1 billion Owens-Illinois auction

AUSTRALIA (From news reports) -- It's private equity and trade at 10 paces in the race to buy United States-based Owens-Illinois' Australian and New Zealand business.

It was reported that two sponsors are lining up against Anthony Pratt's Visy Industries in the third, and final, stage of the Goldman Sachs-run $1 billion auction.

Binding offers are due by February 19.

Sources said Visy - whose modest glass manufacturing business is dwarfed by its cardboard and plastic packaging operations -sees strong strategic merit in acquiring the business given the potential synergies. The packaging giant is taking its own counsel on the proposal at this stage.

Owens-Illinois' local division is the largest manufacturer of glass bottles and containers in Australia and New Zealand, supplying 850,000 tonnes of glass products a year, according to a sale flyer sent to potential buyers last October.

Half of its revenue comes from beer bottles, while 30 per cent is tied to wine and there is another 10 per cent in non-alcoholic beverages.

It is understood Visy is up against Sydney buyout firm Pacific Equity Partners, which raised a $2.5 billion fund last year, and global private equity giant Blackstone.

The two sponsors have started working through final diligence materials, and speaking to local lenders and offshore banks about potential funding packages, sources said.

As reported last year, PEP drafted in Credit Suisse's investment banking team for advice while Blackstone turned to Australia's own Macquarie Capital.

The Carlyle Group and BGH Capital, which has the most capital to deploy out of the sponsors, have dropped out as did Bain Capital before Christmas.

To recap, Owens-Illinois and Goldman Sachs asked tyreckickers to lob a new offer, or at least confirm indicative views, in the week starting December 16.

The truncated second round, which sources said was essentially a "price-check", was designed to help keep momentum in the process over the Christmas break and was to be followed by a third and final binding stage with a smaller group of tyrekickers in the new year.

The up-for-sale business - which is expected to be worth as much as $1 billion - recorded $750 million a year revenue and $140 million in earnings before interest, tax, depreciation and amortisation,

Anthony Pratt is Australia's richest person, and has more than doubled the size of the Visy and Pratt Industries businesses in Australia and the US, respectively, since his father Richard Pratt died in 2009.


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