Leading manufacturer of primary plastic packaging for the pharmaceutical industry
In March 2002, Montagu acquired Risdon Pharma from Crown Cork and Seal Inc. ("Crown") for €97 million. Following an approach from a number of interested trade acquirors, in August 2003 the company was sold to Rexam Plc for a total consideration of €125 million, generating in just 18 months a multiple of close to two and a half times the initial investment for Montagu's clients.
Risdon was a leading European manufacturer of primary plastic packaging for the pharmaceutical industry. It was the European leader in blow moulded containers such as eye droppers and nasal sprays, and a major player in the fast growing segment of drug delivery systems, such as metered dosage anti asthma inhalers.
Risdon operated in a fragmented market made up of a series of niches in which barriers to entry were high. These included tough regulatory constraints (such as health authority approvals), where significant investment was required to achieve the stringent requirements necessary to meet the approval criteria, and the need to have the specific capability to manufacture high volumes of product in clean rooms at quality levels that met pharmaceutical industry standards. The company served its clients, the blue-chip pharmaceutical companies, from two production facilities in France and Germany.
In 2002, Risdon generated sales of €51 million and a 25% EBIT margin compared to sales of €44 million and a 21% EBIT margin the year before.
When Montagu was introduced to the deal in October 2001, Crown Cork and Seal had given exclusivity to a trade buyer after a failed auction process which kept some natural buyers away. Thanks to strong management support we were allowed a chance to bid once the trade buyer's exclusivity expired, but in a contract race against a trade buyer who had previously had greater access to the business. To secure the deal we had to move quickly and operate flexibly. Not only did we have to understand and provide for the dynamics and funding needs of a business on a strong growth track, but also we needed to resolve an unusual number of complex issues relating to the fact that this was a multi-jurisdictional asset deal. Crown, who had not before sold to an Management Buyout and was in the middle of a disposal programme announced to the market, was convinced by our professional and thorough approach that we were a more reliable counter-party than the possible trade buyers.
The success of this transaction was based upon the robust commitment shown by the management team to lead their own buyout. We gave them the support they needed to make the deal happen and built an understanding that allowed us together to make the key strategic decisions that underpinned the value increase in the business and subsequent exit.