US private equity major Blackstone has signed an agreement to acquire a majority stake in Essel Propack Ltd (EPL), a part of billionaire media baron Subash Chandra’s Essel Group, for up to $460 million (about ₹3,211 crore). The deal comes at a time when the troubled Essel Group is looking to settle its debt and keep the creditors at bay.

Blackstone, through PE funds managed by it, will acquire a 51 per cent stake from Ashok Goel Trust at ₹134 per share, and will make a mandatory open offer to buy an additional 26 per cent stake in EPL. The company has fixed the open offer price at ₹139.19 per share, it said in a statement. Essel Propack’s shares closed at ₹132.65 per share on the BSE on Monday.

At present, Ashok Goel Trust and its affiliates hold about 57 per cent stake in EPL, a specialty packaging company and a laminated tubes manufacturer. Based on the open offer subscription, the total acquisition price will vary between ₹2,157 crore and ₹3,211 crore ($310 million-$462 million).

EPL Chairman Ashok Goel, who is Subash Chandra’s brother, will retain a minority stake in the company. The sale is expected to close in the coming months, it added.

“We have been discussing this deal for the past few months. We are entering into a partnership with the company, Ashok Goel and the management team to take the company to the next level. We think we can jointly take this company to a growth mode across fast-growing segments such as beauty, cosmetics and pharmaceuticals and fast-growing geographies such as India, China and Latin America,” Amit Dixit, Senior Managing Director and Head of Private Equity in India at Blackstone, said in a conference call.

“EPL is a leader in emerging markets and is well-positioned to benefit from the consumption growth across categories. This investment follows Blackstone's long-standing belief and track record in the B2B2C sector,” he added.

EPL, a market leader

Founded in 1982, EPL is a global leader in laminated tubes with presence across 10 countries. The firm, which manufactures 7 billion tubes annually, employs more than 3,158 people. The company posted revenues of ₹2,642 crore (trailing 12 months) as of December 31, 2018.

Morgan Stanley was the financial advisor to the sellers and their affiliates. PWC, Khaitan & Co and Baker McKenzie were the advisors to the sellers and their affiliates. KPMG, Trilegal and Simpson Thacher & Bartlett were the advisors to Blackstone.

“As we embark on the next trajectory of growth at EPL, Blackstone brings deep expertise in the packaging space globally with a senior team of highly-experienced professionals with a proven track record of creating value. I see Blackstone as a partner with the same values, culture and ethos,” Ashok Goel, Chairman and Managing Director at EPL, said.

“We will strengthen our service levels and deliveries to our customers and build stakeholders-value together,” he added.

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