(Reuters) – Buyout groups BC Partners, Onex and Partners Group are set to bid for Swiss packaging maker SIG Combibloc in an auction likely to raise less for seller New Zealand’s Reynolds than initially seemed likely, sources familiar with the matter said.
Reynolds, backed by New Zealand’s richest man, is looking to sell SIG Combibloc to reduce debt.
“Offers are due Monday,” one of the sources said, adding several other private equity groups including PAG had dropped out of the race.
Firms such as Crown and Asian Paper had also spent some time looking at SIG Combibloc but were not expected to be among the bidders for the world’s No. 2 maker of drink cartons.
The sources added Onex and Partners Group might tie up with other investors.
While bidders with first round offers above 3.9 billion euros ($4.9 billion) were accepted for the second round, valuations have since come down to 3.5-3.8 billion, the sources said. That could in part be due to a drop in SIG’s recent business performance.
SIG, which Hart acquired for $2.3 billion in 2007, has annual earnings before interest, tax, depreciation and amortisation (EBITDA) of around 420 million euros and had originally been expected to fetch about 10 times that amount.
Bankers are working on debt packages of about 6.5 times SIG’s EBITDA, or 3 billion euros including undrawn debt. Leveraged loans and high-yield bonds denominated in euros and dollars are all being considered, banking sources said.
Representatives for BC Partners and Partners Group declined to comment, while Onex, Reynolds and SIG were not immediately available for comment.
SIG manufactures aseptic carton packaging that allows juices, milk, soups and sauces to be stored for a long period of time without refrigeration. The company has around 5,100 employees in 40 countries.