US pharma packaging specialist acquired as Irish group refinances €400m funding

PACKAGING group Clondalkin has paid $110m (€80.7m) to acquire US pharmaceutical and healthcare packaging specialist Keller Crescent.

The price of the transaction, unveiled yesterday, was contained in a bond document for a recent €400m refinancing of the Irish group, seen by the Irish Independent.

The document does not identify Keller Crescent by name, but the description of a "target acquisition" in it matches that of the Indiana-based company, which had sales of $88.9m last year.

It also shows that Clondalkin saw its own sales rise 5pc last year to €763m, though profit from operations slipped almost 15pc to €59.17m.

Earnings for the previous year had been flattered by extraordinary gains from asset and property disposals.

About 72pc of the group's business is in flexible packaging, where products include lids and seals for dairy products and foil liners used by the tobacco industry.

Clondalkin saw its own sales rise 5pc last year to €763m

The remaining 28pc of revenues currently come from specialist products, including folding cartons and packaging for pharmaceutical and healthcare markets.

Some €282.4m of the proceeds form Clondalkin's bond placement, which was led by investment banks Deutsche Bank and Lehman Brothers, has been used to replace existing senior debt. The remainder is earmarked for acquisitions.

Following the €11.3m purchase Kenilworth Products, an Irish pharma labelling company, earlier this year, Clondalkin has a further €28m to spend on acquisitions.

Both Kenilworth and Keller Crescent fit into Clondalkin's strategy of focusing increasingly on higher margin, value-added products.

Clondalkin was taken off the Dublin stock market in 1999 in a €385m leveraged management buyout deal backed by private equity firm Candover Investments. Five years later, the business was sold on to Warburg Pincus, another private equity house, in what is known as a secondary buyout, which valued that company at €650m. Management, which includes Clondalkin chief executive Norbert McDermot and finance director Colman O'Neill, own 14.4pc of the business.

Following the €400m bond offering, the group is sitting on a debt pile of €769.2m, including €217.4m of subordinated shareholders' loans. Demand for the bond among institutions was over nine times that of the offering.
Source: independent