Graeme Hart plans biggest-ever deal with $6bn Pactiv buy-out

Pactiv shareholders will receive $33.25 in cash for each common-stock share, some 30% higher than its value on 14 May, which values the company at around $6bn (£3.8bn).

The pricetag for the acquisition eclipses Amcor’s $2bn takeover of a majority of Alcan’s businesses last year – the last major international M&A move in the packaging industry. It is also by far Hart’s biggest packaging deal (see below).

Reynolds is a wholly-owned subsidiary of Rank Group, which is owned by New Zealand’s richest man Graeme Hart.

‘Outstanding company’
Hart said: “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. I am very pleased to add these businesses to our packaging group.”

The deal is being financed by a combination of equity from Reynolds and Rank Group, and debt financing from Credit Suisse, HSBC and Australia New Zealand Bank.

Richard L. Wambold, Pactiv chairman and chief executive, said: We are excited to join with Reynolds’ consumer and foodservice businesses to grow and add more capabilities for our customers. “We are pleased to join a group that is committed to the growth of both its packaging and consumer businesses.”

Rank was first connected with Pactiv three months ago. At the time, paper packaging group Georgia-Pacific was also thought to be in the running for the business.

Rank’s biggest deal
The deal is Hart’s biggest packaging acquisition. He paid $2.5bn for SIG in early 2007 and $2.7bn for part of mining group Alcoa’s packaging business later that year.

Hart also reorganised the ownership structure of two of his biggest packaging businesses, Closure Systems International and Reynolds Consumer Products, last autumn.

Pactiv is based in Lake Forest, Illinois and specialises in the consumer and foodservice/food packaging markets. It posted sales of $3.36bn in 2009 with pre-tax profits of $486m.

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