Pactiv Corp., the maker of Hefty trash bags, agreed to be bought by Rank Group Ltd. in a transaction valued at about $6 billion, helping the New Zealand packaging company expand in takeout-food containers and cutlery.
The per-share price is $33.25, 39 percent more than the $23.97 close on May 14, before talks were disclosed. The financing includes equity from Rank Group and unit Reynolds Group Holdings Ltd., as well as debt financing from Credit Suisse, HSBC and Australia New Zealand Bank.
The acquisition is the biggest deal for Rank Group’s owner and New Zealand’s richest man, Graeme Hart, a former tow-truck driver who amassed a fortune investing in businesses from lumber to dairy and built a global packaging empire through takeovers. His holdings include the world’s second-biggest drink-carton company and the maker of Reynolds Wrap foil.
“Volume plays a very important part in packaging,” said Joe Leong, a Melbourne-based food and packaging analyst at BIS Shrapnel, a provider of industry reports and forecasts. “Plastic packaging is a very technology-driven, capital-driven industry. You need to have the production capacity.”
Pactiv, based in Lake Forest, Illinois, rose 5.4 percent to $32.60 at 9:06 a.m. before U.S. exchanges opened after closing at $30.92 yesterday on the New York Stock Exchange.
Hart’s purchases over the last decade include $2.5 billion for Swiss drink-carton maker SIG Holding AG and $2.7 billion for Alcoa Inc.’s packaging business.
Hart last year combined some of his acquisitions into a new corporate entity, Reynolds Group Holdings Ltd., with 2.8 billion euros ($3.6 billion) in sales in 2009. New Zealand’s National Business Review calls him the country’s richest man, with an estimated NZ$5.5 billion ($3.9 billion).
Revenue fell 6.2 percent in 2009 as consumers spent less during the economic decline. While sales have since increased for two straight quarters, Wambold aims to boost support for sales of Pactiv’s Hefty trash bags in the current period to make up for lost volume in the previous one, he said last month.
“While others in the industry were struggling, Pactiv had a healthy balance sheet and was able to innovate and redeploy their cash,” said Christopher Manuel, an analyst with KeyBanc Capital Markets in Cleveland.
Manuel estimated the company would fetch $35 to $40 a share as a takeover candidate. Pactiv has been an independent company since it spun off from Tenneco Inc. in 1999. It’s been in discussions with potential buyers for several months, according to people with knowledge of the talks.
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