Business

German carton manufacturer Edelmann Group has sparked speculation of a takeover of Chesapeake after it increased its stake in the company to 13.4%, making it the second largest single stakeholder.

A management spokesman for Carl Edelmann said that Chesapeake is "ideally placed with sites in England, France, Ireland, Belgium and also Germany. Pooling this capacity with Edelmann's could create Europe's biggest pharmaceutical packaging manufacturer".

Tim Rothwell, packaging specialist at Lansdowne Capital told Packaging News that Chesapeake had been in a "sorry state" for a while, reflected in its poor share price performance, which has left the business "vulnerable to a potential takeover".

"Edelmann could either be aiming to make a takeover offer or they may just be taking a punt and taking a stake when the share price is depressed in the hope that someone else may come out of the woodwork," he said.

Rothwell also questioned the expense of locating Chesapeake's headquarters in Richmond, Virginia when the majority of the company's operations are located in Europe.

In March, Chesapeake reported a $1.9m loss from continuing operations, excluding special items, compared with a $7m profit in 2006.

Sales in Chesapeake's Paperboard Packaging division fell 3% following the loss of substantial business with British American Tobacco (BAT), although this was partially offset by increased sales of German confectionery.

Edelmann, which has operations across Great Britain, Poland, France and the USA, specialises in pharmaceutical, premium and intelligent system packaging for liquids, powdered, granulated and highly-viscous products.

The speculation follows the publication of Chesapeake's first corporate responsibility report, which outlines its "key social and environmental responsibilities" to primary stakeholders.

Chesapeake chief executive and president Andrew Kohut said: "We intend to implement best practices in all areas of corporate responsibility and integrate those throughout our global operations."

Chesapeake has 45 locations in Europe, North America, Africa and Asia and employs approximately 5,400 people worldwide.