M&As: EPL/Indovida to merge to create US$2 bn packaging firm

Flexible packaging company EPL Limited, (formerly Essel Propack), which is backed by Blackstone, has announced a definitive merger agreement with Indovida India Private Limited, a subsidiary of Thailand-based integrated PET firm Indorama Ventures. This strategic combination is set to create one of the largest consumer packaging platforms in emerging markets, with a combined valuation of approximately US$1 billion and projected annual revenues of around US$1 billion. Also following the merger, Indorama will emerge as the largest shareholder with a more than 50% stake.

The merger unites EPL's expertise in flexible packaging with Indovida's strength in the rigid PET packaging sector, positioning the new entity for accelerated growth and enhanced market presence.

The terms of the transaction highlight significant value creation for EPL shareholders. The company has been valued at approximately US$1.2 billion. In contrast, Indovida India is valued at approximately us$100 million, reflecting a valuation multiple that is at a 35% discount to EPL's.

Following the merger, the shareholding pattern of the combined entity will see a significant shift. Indorama Ventures, through its subsidiary, will become the co-promoter, holding a majority stake of 51.8%. This move underscores Indorama's strategy to deepen its presence in the Indian market. Blackstone's stake, held through an affiliate, will be adjusted to 16.6%, while the remaining 31.6% will be held by other public shareholders. This new structure provides the merged company with strong strategic parentage and continued institutional backing.

The primary driver for this merger is the creation of a diversified, multi-format packaging leader. By integrating Indovida's rigid PET capabilities, EPL significantly expands its Total Addressable Market (TAM) from US$1.4 billion to an estimated US$19 billion.

The combined entity will have a strong focus on high-growth emerging markets, which are expected to contribute approximately 75% of its total revenue. This strategic pivot allows the company to offer a comprehensive product portfolio to a wider customer base across various consumer segments, including food, beverage, and personal care.

The merger is projected to unlock substantial financial benefits. Annual synergies are estimated to be in the range of US$15 million to US$10 million, driven by procurement efficiencies, supply chain optimization, and leveraging complementary geographic footprints. The deal is structured to be immediately margin-accretive.

For the calendar year 2025, the EBIT margin of the merged entity is projected to expand to 13.6% from EPL's standalone 12.4%. Similarly, the Return on Capital Employed (RoCE) is expected

to improve from 18.7% to 20.9%.

The new entity will operate 40 manufacturing facilities across 17 countries. This expanded footprint provides EPL with strategic entry into new, high-growth geographies where Indovida has an established presence, particularly in Africa and Vietnam.

The company will need to secure clearances from the Securities and Exchange Board of India (SEBI), the Competition Commission of India (CCI), the National Company Law Tribunal (NCLT), and stock exchanges. The entire process, including securing all necessary approvals, is expected to take approximately 12 months.

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