PARIS: French construction materials giant Saint Gobain said on Monday that it had a firm offer from international glass packaging company Ardagh for its Verallia North America operation for a price of about 1.275 billion euros ($1.7 billion).
Last year the North American activities of Verallia generated sales of about $1.61 billion and an operating profit of $171 million.
The business says it is the second-biggest maker of glass bottles and jars in the United States where it has 13 industrial sites.
The North American activities employ slightly more than 4,400 people.
Saint-Gobain, a global group with a strong presence in the manufacture of glass and building materials, will consult with its works council before reaching a decision, it said in a statement, noting that the transaction would represent 6.5 times the company's underlying operating profit EBITDA in 2012.
Saint-Gobain said that the offer was not conditional on arrangements for finance but was subject to approval from US competition authorities.
The chief executive of Saint-Gobain Pierre-Andre de Chalendar said the offer provided an excellent opportunity to take forward his group's strategy of focusing activities on the housing sector.
Money raised by the sale would be used mainly to strengthen the group's balance sheet. The company would continue with its targeted policy of buying small and medium-sized businesses.
The terms were favourable and offered the US packaging activities promising industrial opportunities, De Chalendar said.
He said that Verallia's other activities in western and eastern Europe, in Algeria and in strongly growing markets in Latin America gave the company global scale. It was leader on its markets, generated strong cash flow and had strong potential for development.
Ardagh company president Paul Coulson said the purchase of the North American part of Verallia marked a big new step in the development of Ardagh, enabling it to move into a new league in terms of scale and product range.
The new North American activities would generate about 40 percent of the company's total sales and earnings before interest, tax, depreciation and amortisation, he said.
Ardagh, with a base in Luxembourg, said the deal should be concluded during 2013. (AFP)
