Blackstone to buy majority stake in Essel Propack for up to $460 mln

Private equity giant Blackstone on Monday said it has entered into a definitive agreement with Ashok Goel Trust to buy a majority stake in specialty packaging company Essel Propack (EPL), the world’s largest manufacturer of laminated tubes.

Ashok Goel Trust and its affiliates currently hold 57% of EPL. Blackstone will pay a purchase price of ₹134 per share to acquire a 51 % shareholding from Ashok Goel Trust, the firm said in a statement. As per the Takeover Code in India, this transaction will trigger a mandatory open offer for a purchase of additional 26% shares of the company and the acquiring entity has released a public announcement to the stock exchanges. The open offer price has been fixed at ₹139.19 per share. Based on the open offer subscription, the purchase price consideration will vary between ₹2,157 crore and ₹3,211 crore (nearly $310 million - $462 million).

Ashok Goel will retain a minority stake in the company. The sale is expected to complete in the coming months, subject to customary closing conditions and approvals.

EPL, founded in 1982, is a global leader in laminated tubes. Through its 20 facilities across 10 countries, EPL manufactures 7 billion tubes annually. EPL's clientele includes marquee global brands in the oral care, beauty, cosmetics and pharmaceutical industries. EPL's last twelve months revenue as of December 31, 2018 was ₹2,642 crore ($380 mm), registering 10% year-on-year growth against industry growth of 2%. Increasing presence in emerging markets and further penetration in the fast growing beauty, cosmetics and pharmaceutical segments is expected to accelerate growth going forward.

"Leveraging the ongoing industry shift to laminated tubes and EPL's leadership position in oral care, our plan is to accelerate growth in fast-growing end categories such beauty, cosmetics and pharmaceuticals,” said Amit Dixit, Senior managing director and head of private equity in India at Blackstone, in a statement.

“EPL is a leader in emerging markets and well-positioned to benefit from consumption growth across categories.”

Morgan Stanley acted as the exclusive financial advisor to the sellers and its affiliates. PWC, Khaitan & Co and Baker McKenzie acted as advisors to sellers and its affiliates. KPMG, Trilegal and Simpson Thacher & Bartlett acted as advisors to Blackstone.

Blackstone is one of the world's leading investment firms. It has $512 billion in assets under management, including investment vehicles focused on private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis. Blackstone has been investing in India since 2005 and has committed to investments over $10 billion in private equity, real estate and tactical opportunities.

On Monday, Essel Propack’s closed at ₹133.50 up 1.37% on the NSE.