Antitrust Law Daily Wrap Up, TOP STORY: FTC conditionally approves combination of glass container makers, (Apr 10, 2014)

By Jeffrey May, J.D.

Ardagh Group, S.A. has won FTC approval of its $1.7 billion proposed acquisition of Saint-Gobain Containers, Inc. The FTC announced today that Ardagh, which describes itself as a global leader in packaging solutions, will sell six glass container manufacturing plants in the United States to resolve the FTC’s July 2013 challenge (In the Matter of Ardagh Group S.A., FTC Dkt. No. 9356, FTC File No. 131 0087).

The FTC alleged that the merger would reduce competition and result in two firms—the merged firm and Owens-Illinois—controlling more than 75 percent of the U.S. markets for glass containers sold to brewers and distillers. The proposed acquisition would combine the second and third largest manufacturers of glass containers (Saint-Gobain and Ardagh, respectively) in the $5 billion U.S. glass container industry. Together, Saint-Gobain, Ardagh, and Owens-Illinois produce the overwhelming majority of the 18 million glass beer and spirits containers used by Americans each year, according to the FTC.

Ardagh entered the U.S. glass container industry through two 2012 acquisitions—first acquiring a single-plant glass container manufacturer, Leone Industries, and then an eight-plant manufacturer, Anchor Glass Container Corporation—the FTC explained in its Analysis to Aid Public Comment. Through the Anchor acquisition, Ardagh became the third-largest glass container maker in the country, supplying glass containers for beer, spirits, non-alcoholic beverages, and food.

In the United States, Saint-Gobain is the second-largest glass container manufacturer, supplying beer, spirits, wine, non-alcoholic beverages, and food containers. Operating under the name “Verallia North America,” Saint-Gobain has 13 glass container manufacturing plants located in 11 U.S. states.

The proposed consent order would require Ardagh to divest six of its nine glass container manufacturing plants in the United States to an acquirer within six months. That acquirer will become the third-largest glass container manufacturer in the United States, according to the FTC. Ardagh also would be required to transfer all customer contracts currently serviced at those six plants to the acquirer.

The divestiture assets include six of the manufacturing plants that Ardagh acquired when it purchased Anchor in 2012, along with Anchor’s corporate headquarters, mold, and engineering facilities. The six plants, which produce glass containers for brewers and distillers, are located in: Elmira, New York; Jacksonville, Florida; Warner Robins, Georgia; Henryetta, Oklahoma; Lawrenceburg, Indiana; and Shakopee, Minnesota. Anchor’s corporate headquarters, mold, and engineering facilities are located in Tampa, Florida, Zanesville, Ohio, and Streator, Illinois, respectively.

Pending the divestitures, Ardagh has agreed to hold the Anchor Glass business separate from its other businesses and assets.

Last month, the Commission withdrew the matter from adjudication to consider proposed settlement terms. Ardagh Group had made a number of settlement offers to resolve the FTC’s concerns. In January, the company disclosed that it had offered to divest the six Anchor Glass plants and Anchor’s Tampa corporate headquarters. In light of the lengthy settlement talks, the final closing date of the transaction was pushed back to the end of April 2014.

The Commission vote to accept the proposed consent order for public comment was three to-one, with Commissioner Joshua D. Wright voting no.

Attorneys: Alan Goudiss and Richard F. Schwed (Shearman & Sterling LLP) for Ardagh Group S.A. Christine Varney and Yonatan Even (Cravath, Swaine & Moore LLP) for Compagnie de Saint-Gobain. Edward D. Hassi for FTC.

Companies: Ardagh Group, S.A., Compagnie De Saint-Gobain, Saint-Gobain Containers, Inc.

MainStory: TopStory Antitrust FederalTradeCommissionNews