Hart’s Rank Said to Have Made $1.6 Billion Graham Offer Topping Silgan

Rank Group Ltd., the packaging company owned by New Zealand billionaire Graeme Hart, is the bidder that submitted an unsolicited $1.64 billion cash takeover offer for Graham Packaging Co., according to a person with knowledge of the matter.

The person declined to be identified because the talks are private. York, Pennsylvania-based Graham, which is controlled by Blackstone Group LP, said in a statement yesterday that it got a $25-a-share bid that topped a share and cash offer it accepted from Silgan Holdings Inc. (SLGN) in April. Graham, which didn’t identify the bidder, rose 17 percent in New York trading.

Hart, New Zealand’s richest man, is attempting to further consolidate the packaging industry in a move that would lift his deals in the past 12 months to $7.5 billion and add customers including Coca-Cola Co., Procter & Gamble Co. (PG) and BP Plc. Since acquiring Pactiv Corp., the maker of Hefty trash bags, for $4.5 billion in November, his closely held Rank has added Honeywell International Inc.’s car-care products unit for $950 million and UCI International Inc. from Carlyle Group for $375 million.

“The all-cash bid theoretically is superior,” Ghansham Panjabi, a Roseland, New Jersey-based analyst at Robert W. Baird & Co. who rates Silgan “outperform” and Graham “neutral,” said in a report.

Rank is not commenting, Linda Scott, a spokeswoman for Hart, said in an e-mail to Bloomberg News today. Jeff Grossman, a Graham spokesman, declined to comment.

The latest offer “could reasonably be expected to lead to a proposal that is superior” to the pending Silgan deal, Graham said in the statement, without naming the bidder.

Packaging Deals

More than $14.2 billion in packaging-company deals have been announced so far this year, compared with $2.57 billion in the first half of last year, according to data compiled by Bloomberg.

Buying Graham would lift Rank’s acquisitions since 2006 to about $17 billion.

Graham jumped $3.68 to $25.63 at 4:15 p.m. in New York Stock Exchange composite trading. Silgan fell $2.53, or 5.9 percent, to $40.62 in Nasdaq Stock Market trading.

Silgan agreed on April 13 to pay 0.402 of a share and $4.75 in cash for each Graham share. That’s equal to $21.08 per share, based on Silgan’s closing price, or $1.38 billion.

The rival bid is from “a private non-investment grade company,” Silgan said yesterday in a separate statement. Silgan said it has the right to match the new bid for three days if Graham officially declares the offer superior.

Robert B. Lewis, a spokesman for Stamford, Connecticut- based Silgan, didn’t immediately respond to calls seeking further comment.

Hart’s Fortune

Hart, 56, is a former tow-truck driver who has amassed a fortune investing in businesses from lumber to dairy. He made at least $2 billion from the buyout and resale of Goodman Fielder Ltd. (GFF), Australia’s biggest baker.

Hart switched his focus to packaging in March 2006 with the purchase of New Zealand’s biggest lumber company Carter Holt Harvey Ltd. for NZ$3.3 billion ($2.7 billion). Later that year he paid $500 million for International Paper Co.’s beverage packaging unit and 2.83 billion francs ($3.4 billion) for SIG Holding AG.

Reynolds Foil

In 2007, Hart added Alcoa Inc.’s packaging unit for $2.7 billion to form Reynolds Group Holdings Ltd, the world’s second- largest drink-carton maker and producer of the namesake foil.

Hart’s wealth was estimated at NZ$5.5 billion last year when he topped National Business Review’s annual Rich List, a position he held in eight of the prior nine years.

Hart dropped out of Auckland’s state-run Mount Roskill Grammar School, which counts Oscar-winner Russell Crowe among former students, to start work. He later returned to study and earned an MBA at the University of Otago.

Silgan could raise the cash portion of its offer to $10 a share, a $5.25 increase, and the acquisition would still be accretive by about 45 cents a share, Robert W. Baird’s Panjabi said in a telephone interview. Silgan is unlikely to make a “knockout” proposal and its final offer may be about $26, he said.

“There is a very high probability that they counter,” Panjabi said.

Break Fee

Graham would be required to pay Silgan a termination fee of $39.5 million if it accepts the competing bid, Graham said in an April filing.

Graham, which makes plastic containers for drinks, condiments and motor oil, is 61 percent-owned by Blackstone. It had net income of $54.7 million on sales of $2.51 billion last year.

Silgan said in April its combination with Graham would create a company with annual sales of more than $6.2 billion and about 180 plants operating in 19 countries employing more than 17,000 people. Silgan has said it also would assume Graham’s net debt of $2.68 billion.

Calculations for the offer values were based on 65.7 million Graham shares outstanding on April 25, according to data compiled by Bloomberg.

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Zachary Mider in New York at zmider1@bloomberg.net; Jack Kaskey in Houston at jkaskey@bloomberg.net.

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net; Jennifer Sondag at jsondag@bloomberg.net.

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