Orora to pour billions into French bottle maker buyout

Melbourne-based packaging company Orora (ASX: ORA) is embarking on one of the largest capital raisings this year in Australia to fund a €1.29 billion ($2.16 billion) buyout of French multinational bottle manufacturer Saverglass, which is owned by US-based Carlyle Group and supplies to wine and spirits producers in more than 100 countries.

After entering a trading halt on 28 August, Orora bottled up news of the potential deal until Friday 1 September when it revealed 'substantial progress' in negotiations with Olympe SAS, the holding company of Saverglass. 

Orora has today announced a fully underwritten $1.345 billion raise to help fund the acquisition, comprising a $450 million institutional placement and an $895 million entitlement offer. The remaining $875 million will come from debt financing.

All new shares under the equity raising will be issued at $2.70, representing a 21.3 per cent discount to the last traded price. Orora expects the acquisition to be mid-single digits earnings per share (EPS) accretive in the first full financial year of ownership.

The Orora leadership plans to make Saverglass the centrepiece of the group's global glass business unit, to be led by Saverglass’ current CEO Jean-Marc Arrambourg.

"We are extremely pleased to welcome Saverglass into the Orora Group," says Orora CEO Brian Lowe.

"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."

Arrembourg describes Orora as a 'natural owner' for Saverglass, highlighting the complementary nature of the two businesses. Near-term synergies of $15 million are expected from network optimisation, cost rationalisation and operational efficiencies.

"We are extremely excited to join Orora as we look to consolidate and accelerate Saverglass’ strong momentum," he says.

In mid-August Orora reported a 4.9 per cent year-on-year increase in sales revenue to nearly $4.3 billion in FY23, and a slight 1.2 per cent drop in net profit after tax (NPAT) from continuing operations of $184.4 million.