Private equity giant Blackstone has agreed to acquire Piramal Glass, the glass packaging business of the diversified Piramal Group, at an enterprise value of $1 billion, said three people with direct knowledge of the deal.
Blackstone will execute the deal in two tranches, as part of the agreement signed between the two parties on Thursday evening, said one of the three persons mentioned above. The New York-based PE firm will first pay $850 million and assume ownership and management control of Piramal Glass. The remaining $150 million will be paid after Piramal Glass achieves certain business milestones.
“The current management team led by Vijay Shah (CEO and president, Piramal Glass), is terrific. Blackstone will support the team with various in-house and industry experts, including Uwe Roehrhoff (former CEO of Gerresheimer, a leading global partner to the pharma and healthcare industries), who is familiar with the company for 20 years, and Harish Manwani, formerly of Unilever, which has been a customer of Piramal Glass for more than two decades,” said this person.
A Blackstone spokesperson chose not to comment on the deal, while an email sent to Piramal Group remained unanswered.
Piramal Glass, part of the $10 billion Piramal Group, is a global manufacturer of specialized glass for cosmetics, perfumery, speciality food, beverages and pharmaceutical industries, operating in 65 countries.
The company is one of the four players globally to have type 1 pharma glass manufacturing capabilities used for complex pharma products such as liquid injectable drugs, which has seen high demand during the pandemic that is ravaging the world.
The glass industry was seen as resilient to the turmoil caused by the pandemic because of demand from the pharmaceutical industry even though segments such as cosmetics and perfumes were impacted.
The deal will allow Blackstone to gain from the global shift from plastic bottles to recyclable glass bottles. Also, glass manufacturing facilities are being shifted from high-cost locations in Europe and the US to emerging markets such as India.
Blackstone will get access to Piramal Glass’ large clientele comprising companies such as Coty, L’Oreal, Diageo, Pernod Ricard, and Sanofi. The company claims to have a majority market share in India and Sri Lanka and is expanding its foothold in the US and Europe.
The global glass market targeted by Piramal Glass is estimated at $10 billion with a compound annual growth rate (CAGR) of 3%. During FY20, Piramal Glass posted revenue of $293 million. Between FY2017 and FY2020, its revenue grew at a CAGR of 5.3%, while earnings before interest, tax, depreciation, and amortisation increased at a CAGR of 9.7%.
Blackstone’s buyout of Piramal Glass follows the PE firm’s 23% stake sale in another packaging firm Essel Propack earlier this year.
The PE giant is one of India’s top asset managers with total investments of about $16 billion, excluding the Piramal Glass deal. In FY20, Blackstone invested about $2.5 billion as private equity in India, while executing India’s largest buyout in financial services of Aadhar Housing Finance for about $470 million.
Within its current portfolio, Blackstone invested a further $70 million in Mphasis in April, taking its stake in the IT services firm to 56.21%. It also invested an additional $75 million in Aadhar Housing Finance in June.
This year, Blackstone sold a 23% stake in Essel Propack for $252 million, as well as a $300 million stake in Embassy Office Parks Reit, and a small stake in Mindspace Business Parks Reit during its initial share sale in July. Blackstone is in active talks to buy out the asset management business of L&T Mutual Fund, according to the first person. If the talks fructify, Blackstone will be able to exhaust the entire corpus of its first Asia fund of $2.5 billion.
