Blackstone to acquire majority stake in Essel Propack

The New York-based private equity firm Blackstone Group has agreed to buy 51% stake in the largest global manufacturer of laminated tubes, Essel Propack, at Rs 134 a share.

24 Apr 2019 | By Rushikesh Aravkar

Ashok Goel, chairman and managing director, Essel Propack

Essel Propack’s chairman and managing director, Ashok Goel, the younger brother of Subhash Chandra who’s the promoter of the Essel Group companies such as Zee Entertainment Enterprises, holds about 57% stake in the company through the Ashok Goel Trust and affiliates. Goel will retain a minority stake in the company post the transaction.

As per the Takeover Code in India, this transaction will trigger a mandatory open offer for a purchase of additional 26% shares of Essel Propack and Blackstone has released an open offer to buy additional shares at Rs 139.19 per share. Based on the open offer subscription, the purchase price consideration will vary between Rs 2,157-crore and Rs 3,211-crore.

According to Amit Dixit, senior managing director and head of private equity in India at Blackstone, this investment follows Blackstone's long-standing belief and track record in the B2B2C sector.

Dixit said, “Essel Propack has decade-long relationships with marquee global customers and a track record of product innovation. Leveraging the ongoing industry shift to laminated tubes and Essel Propack’s leadership position in oral care, our plan is to accelerate growth in fast-growing end categories such as beauty, cosmetics and pharmaceuticals. Essel Propack is a leader in emerging markets and well-positioned to benefit from consumption growth across categories.”

For the quarter ended 31 December 2018, Essel Propack earned a profit of Rs 17.37-crore on revenue of Rs 221-crore, marginally rising from a profit of Rs 13-crore on revenue of Rs 209-crore in the preceding quarter.

Goel said, “It has been a wonderful journey for me leading Essel Propack to a position of global leadership in specialty packaging especially laminated tubes. Today, EPL is a partner for leading global customers across sectors and geographies through a sharp focus on innovation, sustainability and agility. As we embark on the next trajectory of growth at Essel Propack, Blackstone brings deep expertise in packaging space globally with the 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. The company's management team is excited to welcome Blackstone."

Essel Propack was established in 1982 has facilities across 10 countries, employing over 3,158 people. The company manufactures 7-billion tubes annually. Its clientele includes marquee global brands in the oral care, beauty, cosmetics and pharmaceutical industries.