Pacific Equity Partners leads race to buy Owens-Illinois

PEP is the leading bidder to buy O-I’s Australian operations

Further evidence has emerged that Pacific Equity Partners is the frontrunner in the competition to buy the Australian operations of Owens-Illinois.

DataRoom has learned that PEP apparently approached O-I about an acquisition almost a year before the business was placed up for sale through advisory firm Goldman Sachs.

It now appears that the US-based O-I ran a sales process to test if there was interest to rival that of PEP. O-I Australasia is right in PEP’s sweetspot.

The private equity firm has a great deal of experience in the manufacturing space and the price tag of about $1bn makes an acquisition within the reach of the Australian deal-maker.

Striking similarities exist between O-I, which manufacturers glass bottles and containers, and Arnott’s Biscuits, which PEP tried to buy last year.

PEP was the underbidder to Kohlberg Kravis Roberts that bought Arnott’s for $3.2bn.

Both O-I and Arnott’s owned their manufacturing sites, and KKR has since sold off the properties held by Arnott’s former owner, the Campbell Soup Company. Left in the contest for O-I is PEP, along with Blackstone and trade player Visy, which is controlled by the billionaire Pratt family.

Final bids are believed to be due shortly.

Overall in Australia and New Zealand, Owens-Illinois, generates $140m of annual earnings before interest, tax, depreciation and amortisation and $750m of revenue.

PEP, meanwhile, is also moving towards a takeover of the $1bn listed cinema and theme park owner Village Roadshow.