Compagnie de Saint-Gobain yesterday agreed to sell its North American glass container unit Verallia North America to Ireland's Ardagh Group for €1,275 million ($1.7 billion), as part of the French construction material giant's plan to exit from the low-margin business.

With revenues of $1.6 billion and operating profit of $171 million in 2012, Verallia North America is the second-largest glass container manufacturer in the US, behind Owens-Illinois.

Based in Muncie, Indiana, Verallia North America produces approximately 9 billion containers annually from its 13 facilities located throughout the US and employs approximately 4,400 people.

Pierre-André de Chalendar, chairman and CEO of Saint-Gobain, said, ''The offer is a new milestone in Saint-Gobain's strategic refocusing on the habitat sector. It puts a high value on our North American containers business, above the multiples contemplated at the time of the planned IPO in 2011, while providing it with promising scope for industrial development.

The Paris-based company said that the sale proceeds will be used mainly to strengthen its balance sheet, while continuing to pursue small or medium sized acquisitions.

''The acquisition of Verallia North America would be another important milestone in the evolution of Ardagh as it would add scale, diversity and value to our global packaging operations. The transaction would increase the size of our glass business globally by almost 60 per cent and be a very significant step in developing our operations in the US. It would result in approximately 40 per cent of Ardagh Group's total sales and EBITDA being generated in the US,'' said Paul Coulson, chairman of Ardagh.

Located in 64 countries and with 2011 sales of €42.12 billion, Saint-Gobain is a global leader in habitat, designs, manufactures and distributes building materials. It is also the world's largest manufacturer of high performance plastics.

Based in Luxembourg, Ardagh is a global leader in glass and metal packaging solutions, producing packaging for most of the world's leading food, beverage and consumer care brands.

Post closing of the transaction, it would operate 113 facilities in 26 countries, employ some 22,000 people and have global sales exceeding €5.4 billion.

Ardagh's clients include, AB InBev, Heineken, Diageo, Pernod Ricard, Bacardi Martini, Heinz, Nestle, Kraft, Danone, Unilever, Procter & Gamble, L'Oreal, Snapple, Coca Cola, Del Monte and other international brands.

Ardagh said that it will raise, partly in euro and partly in US dollars, a total of $1.45 billion equivalent of debt financing through the issue of Senior Secured Notes and Senior Notes. The proceeds from the issuance and sale of the Notes would be used to pay the cash consideration for the acquisition and certain costs.