India's largest glass bottle manufacturer Hindusthan National Glass and Industries Ltd is in talks with a European multinational to sell a minority stake, with plans to form a strategic partnership for global expansion. Hindusthan National Glass is divesting part of its 16.76% treasury stock–shares that are held by the issuing corporation and are available for resale. Hindusthan National Glass' treasury stock was created in 2002 when it merged Owens Brockway India Ltd with itself.
The company with which it is in talks is one of the world's top glass container makers, but senior vice-president and chief financial officer Laxmi Narayan Mandhana declined to name the potential stake buyer or share other details of the deal that's being negotiated. “This strategic stock divestment to the multinational company would help both the companies to tap the complementary strengths, and become an undisputed leader in the world glass packaging market,” he said. The deal could go through by the end of this fiscal. Going by Thursday's closing price of Hindusthan National Glass shares, the company is valued at '1,942 crore. In June, US private equity firm Sequoia Capital acquired a stake of at least 7% in Hindusthan National Glass, partly from the treasury stock and from the promoters, the Kolkata-based Somani family, for about '127 crore.
The firm has initiated a capacity expansion drive by setting up two new manufacturing plants at '1,050 crore. The new facilities, which will create additional capacity of 1,300 tonnes per day (tpd), are to come up in Andhra Pradesh and western India. It has current capacity of 2,825 tpd.
“Our strategic stake sale is not exactly to raise money, but to expand the business with a strong global footprint by exploring the capabilities of the multinational partner, and our own strength,” Mandhana said in an interview on Wednesday.
The equity investment by the strategic partner will benefit the group company, Glass Equipment (India) Ltd, which makes machinery for glass container industry, by offering it a potential opportunity to supply to the partner as well other international firm.
Hindusthan National Glass, which makes glass bottles used in the food and beverage, and pharmaceutical industries, is also exploring acquisition opportunities overseas, in markets such as Europe and Africa.
The leader in its segment with a domestic market share of 55%, it earns almost 95% of its revenue from its local business. “We are in exclusive discussions for acquiring two companies, one in Southeast Asia and the other in Europe. The two acquisitions together could cost around '550 crore,” said joint managing director Mukul Somani in a separate interview on Thursday.
If they go through, these acquisitions are expected to be completed by March.
Investment banker Rothschild Consulting and PricewaterhouseCoopers are advising the company on these deals. To fund these acquisitions, it plans to sell a part of its treasury stock to institutional investors, and there are three to four potential buyers, Somani indicated.