By Greg Roumeliotis
(Reuters) - Ardagh Group [ARDGR.UL], the packaging conglomerate controlled by Irish billionaire Paul Coulson, is preparing a binding offer for the assets being divested by drinks can makers Ball Corp (N:BLL) and Rexam Plc (L:REX), according to people familiar with the matter.
Ardagh Group is competing against three private equity firms for the packaging plants up for sale, the people said this week. The strong interest in these assets increases chances that Ball's pending acquisition of Rexam will meet conditions set by antitrust authorities.
Ardagh Group and buyout firms Blackstone Group LP (N:BX), Apollo Global Management LLC (N:APO) and Madison Dearborn Partners LLC have reached the final round of bidding for the assets, the people said. Binding bids are due later this month, they added.
Based on annual earnings before interest, tax, depreciation and amortisation of around $450 million, the assets being divested will likely be valued at between $3 billion and $4 billion (£2.1 billion and £2.8 billion) in any deal, the people said.
The sources asked not to be identified because details of the sale process are confidential. Ball, Rexam, Blackstone, Apollo and Madison Dearborn declined to comment, while Ardagh Group did not immediately respond.
Ball and Rexam have offered to sell 12 plants across Europe, ten of which make cans while two produce can ends. Four of the factories are in Germany and three in Britain. Separately, Ball is selling about eight sites in the United States and several in Brazil, also due to antitrust concerns.
The world's two largest beverage can makers by volume, which supply Coca-Cola Co (N:KO) and Anheuser-Busch InBev (BR:ABI), want to merge to better manage capital spending and cut costs.
The European Commission, however, launched an extensive review of the deal, fearing it could push up prices for companies and consumers.
Based in Luxemburg, Ardagh Group is a supplier of glass and metal containers. It operates 89 manufacturing facilities across 21 countries, and has global sales of approximately $6.2 billion.
If successful, the deal would be the most significant acquisition by Ardagh Group since its $1.7 billion agreement in 2013 to acquire Verallia North America, the U.S. jar unit of France's Saint-Gobain (PA:SGOB).
Credit ratings agency Moody’s Investors Service Inc cautioned in August that Ardagh should not engage in further significant debt-financed acquisition activity until operational stability had been achieved following the integration of Verallia North America.
Late last year, Ardagh Group pulled the initial public offering of Odessa, its metals packaging division, citing challenging market conditions.