The company that makes the aluminum cans used by LaCroix, White Claw and other beverage giants is spinning off that business in a deal that values the new company at $8.5 billion, according to several people with knowledge of the plan.
The deal by Ardagh Group, which is based in Luxembourg, would be in the form of a merger with a special-purpose acquisition vehicle, or SPAC, backed by an affiliate of the Gores Group, the California private equity firm. It could be announced as soon as Tuesday, said the people, who spoke on the condition that they not be named because the negotiations are confidential.
It is a bet on the continued growth of the can business, as companies increasingly weigh the environmental consequences of their products. Nestlé announced the sale of its water business for $4.3 billion this month, in part a move to shift away from water packaged in plastic. Aluminum cans are far easier to recycle than plastic bottles.
The Gores SPAC, named Gores Holdings V, is the seventh such deal the group has done.
Ardagh will retain a roughly 80 percent stake in the company after the deal. Investors are contributing a $600 million private placement, while Gores is putting in $525 million in cash. The new company, Ardagh Metal Packaging, will issue $2.65 billion of new debt.
Ardagh generates more half its roughly $7 billion in annual sales from making cans for beverage companies. This past year, sales by the unit grew 2 percent, fueled by beverage sales and environmental awareness, while earnings before interest tax depreciation and amortization grew 8 percent. Ardagh will keep its glass packaging business.
For beverage companies, cans have become an increasingly important tool for branding, providing colorful and sleek packaging.
When Ardagh acquired its canning operation in 2016 for $3 billion, it did most of its business with legacy brands like large soda and beer companies. It has since worked with younger and faster-growing seltzer-based brands like White Claw, LaCroix and Truly Hard Seltzer to help charge its growth. To prepare for further expected expansion in the United States, it bought a factory in Huron, Ohio.
Globally, the company is eyeing growth in Europe and Brazil, where beer sales remain strong as consumers are increasingly shifting from tap to cans.