Adding film products to its injection molded, extruded, and thermoformed bottles, containers, tubes, and closures, Berry Plastics Group Inc. (Evansville, IN) has agreed to a stock-for-stock merger with Covalence Specialty Materials Corp. (Bedminster, NJ). Ira Boots, chairman and CEO of Berry will remain in that position for the combined company, which will still be called Berry Plastics, and Kip Smith, CEO of Covalence, will stay on to manage that business.
Covalence, which is made up of the former assets of Tyco Internationals plastics and adhesives group, was purchased by the private equity fund Apollo Management V LP for $975 million in 2006. Berry which is also majority owned by Apollo, with Graham Partners II LP holding a minority stake, was also acquired last year by Apollo for $2.25 billion from Goldman Sachs Capital Partners and JP Morgan Partners, which paid First Atlantic Capital $837.5 million in 2002 for the business (see e-Weekly July 6, 2006 for initial report).
Covalence released fiscal Q1 2007 results on March 12, the same date as the merger, posting net revenue for the three months ending Dec. 29, 2006 of $366.7 million, down 19% from the $450.2 million of the year prior. The company, which sells B&C intensive house wraps, electrical coatings, and electrical and HVAC tapes, cited lower volumes from a mild hurricane season, weak housing starts, and rising polyethylene (PE) prices for the downturn. The company is split among adhesives, coatings, and plastics groups, with Covalence Plastics manufacturing PE film-based products and disposable polystyrene plasticware. Key film products include trash bags, drop cloths, sheeting, and agricultural, stretch, and shrink films.—[email protected]