Private equity giant Blackstone has agreed to acquire Piramal Glass, the glass container business of the diversified Piramal Group, for 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 late Thursday, said one of the three people 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.
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“The current management team led by Vijay Shah (CEO and President of Piramal Glass) is fantastic. Blackstone will support the team with several industry and internal experts, including Uwe Roehrhoff (former CEO of Gerresheimer, a leading global partner for the pharmaceutical and healthcare industries), who is familiar with the company for 20 years, and Harish Manwani , from Unilever, which has been a Piramal Glass customer for more than two decades, ”said this person.
A spokesperson for Blackstone chose not to comment on the deal, while an email sent to Piramal Group went unanswered.
Piramal Glass, part of the $ 10 billion Piramal Group, is a global manufacturer of specialty glass for the cosmetics, perfumery, specialty food, beverage and pharmaceutical industries, operating in 65 countries.
The company is one of four players globally that has manufacturing capabilities for Type 1 pharmaceutical glass used for complex pharmaceuticals, such as liquid injectable drugs, which have been in high demand during the pandemic that is ravaging the world.
The glass industry was deemed resistant to the upheaval caused by the pandemic due to demand from the pharmaceutical industry, even though segments such as cosmetics and perfumes were affected.
The agreement will allow Blackstone to benefit from the global shift from plastic bottles to recyclable glass bottles. Additionally, glass manufacturing facilities are moving from high-cost locations in Europe and the US to emerging markets such as India.
Blackstone will have access to the large clientele of Piramal Glass, which includes 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 presence in the United States and Europe.
The global glass market that Piramal Glass is targeting is estimated at $ 10 billion with a compound annual growth rate (CAGR) of 3%. During fiscal year 2020, Piramal Glass posted revenue of $ 293 million. Between FY2017 and FY2020, its revenue grew at a CAGR of 5.3%, while earnings before interest, taxes, depreciation, and amortization increased at a CAGR of 9.7%.
Blackstone’s purchase of Piramal Glass follows the sale of PE’s 23% stake in another packaging company Essel Propack earlier this year.
The PE giant is one of India’s leading asset managers with total investments of around $ 16 billion, excluding the Piramal Glass deal. In fiscal year 20, Blackstone invested around $ 2.5 billion as private equity in India, while executing India’s largest purchase of financial services from Aadhar Housing Finance for approximately $ 470 million.
Within its current portfolio, Blackstone invested another $ 70 million in Mphasis in April, bringing its stake in the IT services company 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 L&T Mutual Fund’s asset management business, according to the first person. If the talks come to fruition, Blackstone will be able to exhaust the entire corpus of its first Asian fund of $ 2.5 billion.