Hart buying Pactiv in $6 billion deal

LAKE FOREST, ILL.  — He may only be the world’s 144th richest man (according to Forbes’ 2010 ranking), but New Zealand tow truck driver-turned-billionaire Graeme Hart is riding high in the plastics packaging universe.

Pactiv Corp., maker of Hefty trash bags, said Aug. 17 that it will be acquired by a division of Hart’s Rank Group Ltd. in a deal worth about $6 billion.

Reynolds Group Holdings Ltd. of Chicago — formed out of former Alcoa Inc. businesses that Rank Group acquired in 2008 — will buy Pactiv of Lake Forest, Ill.

According to an Aug. 17 news release, Reynolds Group is offering Pactiv shareholders $33.25 per share, a premium of about 39 percent more than the closing price of $23.97 on May 14, the last trading day before reports of a potential deal.

Pactiv’s board unanimously approved the deal, according to the release.

“We are excited to join with Reynolds’ consumer and foodservice businesses to grow and add more capabilities for our customers. All of the Pactiv team takes pride in the fact that we have been able to create the shareholder value released by this transaction, and we are pleased to join a group that is committed to the growth of both its packaging and consumer businesses,” Pactiv Chairman and CEO Richard Wambold said in the release.

In an Aug. 17 telephone call, Pactiv spokesman Matthew Gonring said the acquisition, which is expected to close at the end of 2010, would not alter Pactiv’s relationships with its suppliers and customers.

The transaction ends market speculation over which company would win the bidding war for Pactiv: Auckland, New Zealand based Rank Group, private-equity firm Apollo Global Management of New York, Georgia-Pacific Corp. of Atlanta, or Wichita, Kan.-based Koch Industries Inc.

“Pactiv is an outstanding company. It is a clear leader in its markets as a result of its broad product line and unique distribution system. I am excited about the opportunity to grow Pactiv’s foodservice and Hefty consumer businesses and to be associated with the people who have made it such a successful company over the years,” Hart said in the release.

While Hart — who’s reputedly worth about $5 billion — rarely gives interviews, he has given away dribs and drabs of his strategy in published reports, mostly by New Zealand media.

He drew up the idea for Rank Group during the 1980s as an MBA student at Otago University in Dunedin, New Zealand.

Rank Group bought the components of Reynolds Group during the closing years of the last decade.

It paid $2.7 billion in 2008 to get Pittsburgh-based Alcoa’s Closure Systems International, Consumer Products, Flexible Packaging and Reynolds Food Packaging.

In 2007, Rank Group bought SIG Holding AG, a Swiss maker of PET blow molding machinery and carton packaging, for $2.5 billion.

Reynolds Group in 2009 posted earnings before taxes, debt and amortization of 665 million euros $859 million) on sales of 2.8 billion euros ($3.6 billion), compared to EBITDA of 521 million euros ($671 million) on sales of 2.9 billion euros ($3.7 billion) in 2008.

Pactiv reported profit of $75 million on sales of $973 million for the second quarter of 2010 compared to profit of $80 million on sales of $901 million for the year-ago period. The company’s overall sales were $3.4 billion in 2009.

According to Securities and Exchange Commission filings, Pactiv operates 43 manufacturing sites in North America and one in Germany. It has two joint ventures in China making corrugated paper cartons.

Ninety-six percent of Pactiv’s sales are to North American customers, the biggest of which is Wal-Mart Stores Inc., which accounted for 21 percent of Pactiv sales in 2008 and 2009. Pactiv employs 12,000.

SOURCE: PlasticsNews.com

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