Orora Group is making a major strategic move, acquiring French-based global bottle manufacturer Saverglass, for an enterprise value of €1.29 billion (A$2.156 billion).
Orora says Saverglass will become the centrepiece of its global glass business unit, and will operate as a third platform for growth, under the leadership of Orora and the Saverglass management team, who will remain with the business.
The acquisition will add more than a quarter again to Orora’s revenues of $4.3 billion, with Saverglass sales reaching $1.2 billion in 2022. On a pro forma basis, the acquisition represents a 69 per cent uplift in Orora’s underlying FY23 EBITDA, taking it to around A$749 million.
In a mammoth equity raising, Orora will seek $1.35 billion from listed equity investors to help pay for the acquisition. It will also use $875 million of acquisition debt financing. Orora will issue 498 million new shares. Institutional investors will be able to invest from today, retail investors from next Tuesday.
Subject to the satisfaction of all conditions, completion of the acquisition is expected to occur in the last quarter of this calendar year. Saverglass has been owned by Carlyle private equity since 2016.
The 126-year-old Saverglass is a global leader in the design, manufacturing, customisation, and decoration of high-end bottles for the premium and ultra-premium spirit and wine markets. It has six manufacturing facilities, located in France, Belgium, Mexico and the United Arab Emirates.
Orora says Saverglass represents, “a unique acquisition of a high-quality business, enhancing Orora’s strategic advantage, scale, diversification and its future growth opportunities”.
Orora says the deal will help take it to a position of one of the world’s biggest glass bottle manufacturers. Saverglass has a 33 per cent market share in the high-end spirits bottles market. Around two-thirds of its revenues come from the high-end bottles market, with the other third from premium wine bottles.
Orora says that from a commercial, product and geographic perspective, the combination of Saverglass and Orora is expected to unlock significant value creation opportunities for the combined Group. The huge US market is in its sights.
Brian Lowe, CEO, Orora, said: “This strategic acquisition further strengthens our existing glass business, establishing Orora as a global player of scale in attractive premium segments. I look forward to working with the Saverglass team, led by CEO Jean-Marc Arrambourg, as we embark on this journey together.”
Arrambourg said, “We are excited to join Orora as we look to consolidate and accelerate Saverglass’ strong momentum. We see Orora as a natural owner of Saverglass, given the high complementarity of the two businesses, and significant benefits to be realised from the combined global network and capabilities.”
Saverglass will retain its brand name, as it holds strong equity and will operate under the Orora banner. It is intended that over the next twelve months, Orora will establish a global Glass business unit that will operate as a platform for growth, combining Orora’s world-class Gawler site with the Saverglass business. This will mean strengthened and shared technical and operational expertise which will benefit customers both in Australia and globally.
Saverglass services luxury spirits and wine producers globally, and differentiates its offering through its integrated decoration capabilities. It has created a “well-invested” network of strategically located manufacturing operations across three continents, located in close proximity to key production regions, servicing customers in 100 countries.
Saverglass claims it is recognised as the preferred partner for established and emerging brands in premium spirits and wine, with design and R&D capabilities providing the ability to create bespoke, exclusive and personalised products. Some 140 new customer models are created each year.
It retains exclusive rights to bottle designs and moulds, resulting in what it says is a loyal and committed customer base, demonstrated by its average 15-year relationship with its top 20 customers. It says it has leveraged its strong market position and global footprint to grow into a “resilient and profitable operator at scale”, with sustained margin performance, achieving a 16 per cent CAGR in revenue and adjusted EBITDA since 2019.
The company says it expects to benefit from continued growth, given it is leveraged to strong premiumisation trends in spirits and wine, and has recently invested in incremental capacity in North America, which it says is a key under-penetrated market, with significant momentum in premium spirits (including tequila and US whiskey) expected to continue. Orora already operates in North America, with substantial packaging and display printing operations.
Orora has a $3bn market capitalisation, a decade after it was spun out of Amcor.
