Blackstone buys majority stake in India's Essel Propack

Mumbai — New York-based private equity fund Blackstone Group said April 22 it is paying up to $462 million to buy Indian specialty packaging company Essel Propack Ltd., the world's largest maker of laminated tubes.

Blackstone, through private equity funds it manages, plans to acquire 51 percent of Mumbai-based EPL from the Ashok Goel Trust and its affiliates, which together own 57 percent of the company. The offer is for 134 Indian rupees ($1.92) per share.

Under Indian law, the transaction will trigger a mandatory open offer for the purchase of additional 26 percent of the shares of the company. That open offer, at 139.19 rupees ($1.99) per share, means the total acquisition costs for Essel will vary between $310 million and $462 million, the companies said.

EPL was trading at 134.30 rupees per share on India's National Stock Exchange when the deal was announced.

Blackstone noted in the release that the packaging industry is shifting to EPL's signature product, laminated tubes, and said it planned continued investments.

"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, Blackstone's senior managing director of private equity in India. "EPL is a leader in emerging markets and well-positioned to benefit from consumption growth across categories."

Ashok Goel, EPL's chairman and managing director, told Plastics News he would continue on the company's board and retain 6 percent equity. He estimated regulatory approval could take two to four months.

"As we embark on the next trajectory of growth at EPL, Blackstone brings deep expertise in packaging space globally with senior team of highly experienced professionals with a proven track record of creating value," he said in the statement.

The statement said EPL, which has 20 factories in 10 countries, saw sales grow 10 percent in 2018, to $380 million, against an industry growth rate of 2 percent.

Goel said EPL has been expanding worldwide, increasing capacity in Mexico, Poland and Germany in the last year. As well, he said the company is expanding its Danville., Va., site with a high-speed line this week.

"We are investing on an average about $25 million in our various sites in expansion and technology [upgrades] annually," he said.

EPL set up a 60,000-square-foot, $15 million plant in Danville in 2002 to make toothpaste tubes for Procter & Gamble Co.

Established in 1982, EPL is the world's largest maker of laminated tubes, employing 3,158 in 10 countries, and making 7 billion tubes annually.

It holds a 36 percent share in the oral care market by volume, and its customers include global brands in the oral care, beauty, cosmetics and pharmaceutical industries.