PAI to acquire SGD Pharma from JIC

Unquote sister publication Mergermarket reported in November 2020 that JIC had mandated Bank of America to sell SGD Pharma. The company posted 2019 revenues of €340m and EBITDA of €90m, sources told Mergermarket, with an EBITDA margin within the 23% standard range for its industry. One source said that a valuation of around 9x EBITDA could be expected.

As the deadline for first-round bids approached, Mergermarket reported that JIC was expecting bids of 12-14x EBITDA, which would value the company at around €1.10-1.26bn.

Reuters reported that PAI's offer for the asset stood at 10x EBITDA, implying a valuation of around €900m. PAI declined to comment on the valuation when approached for comment by Unquote.

PAI is investing in SGD Pharma via PAI Europe VII, which held a final close in March 2018 on €5bn. The fund writes equity tickets of €150-400m for European companies with enterprise values of €300m-1.5bn.

According to Unquote Data, there have been 14 buyouts in the containers and packaging sector in 2021 to date, with an aggregate value of €4.85bn. In 2019, 25 buyouts totalling €9.4bn were recorded in the sector, compared with 22 deals totalling €2.05bn in 2020.

Sub-sectors including food packaging have benefited from an increase in consumers cooking and eating at home under coronavirus lockdowns. Recent buyouts in the sector include KPS Capital Partners' €2.25bn acquisition of Crown's European tinplate business in April 2021. In May 2021, Lindsay Goldberg announced the €900m sale of plastic packaging producer Schur Flexibles to B&C Group, although the GP retained a 20% stake in the business following the sale.

Previous funding
Oaktree Capital Management acquired an 80% stake in SGD in January 2010 as part of a restructuring deal. According to Unquote Data, SGD's creditors took a 20% stake in the business in exchange for writing off 63% of the company's debt, reducing it to €225m. According to contemporary French press reports, the deal valued SGD at €140m.

The company was subsequently divided into two entities: SGD Pharma, which served the pharmaceutical industry; and Verescence, which served clients in the beauty and perfume industries. Oaktree sold SGD Pharma to JIC In July 2016; the company posted revenues of €290m in 2015.

The sale of Verescence followed in 2018, with Stirling Square Capital Partners acquiring the business.

Company
Founded in 1896 and formerly known as Saint Gobain Desjonquères, SGD Pharma produces glass packaging for the pharmaceutical industry. Its portfolio comprises Type I moulded tubular glass, as well as Type II and Type III amber and flint glass packaging. The firm employs 3,200 people and is headquartered in Paris. It posted 2020 revenues of €347.5m.

People
PAI Partners – Laurent Rivoire (managing partner).
SGD Pharma – Christophe Nicoli (CEO).

Advisers
Equity – Citi (M&A); Rothschild (M&A); Willkie Farr & Gallagher (legal); 8Advisory (financial due diligence, tax); Bain & Company (commercial due diligence); KPMG (environmental due diligence).
Vendor – Bank of America Securities (M&A); Bredin Prat (legal); PwC (financial due diligence, tax); Roland Berger (commercial due diligence); ERM (environmental due diligence).

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• Buyouts
• France
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• France
• PAI Partners