Reynolds outbids Silgan for Graham

Graham Packaging Company Inc. (York, PA) will terminate its merger agreement with Silgan Holdings Inc. (Stamford, CT) and enter into a new binding written definitive agreement with Reynolds Group Holdings Limited, after that company offered a higher purchase price to Graham of $25/share. Graham's board of directors, following the recommendation of its special committee, announced the move to Silgan on June 13, with the new arrangement final after June 16.

In April, Graham announced a deal with Silgan where Graham's shareholders would receive 0.402 shares of Silgan common stock and $4.75 in cash for each share of Graham common stock, representing a total enterprise value, including net debt, of approximately $4.1 billion. Based on Silgan's closing stock price on April 12, 2011, the transaction implied a value of $19.56 per Graham share, representing a premium over the closing price of Graham's stock on April 12, 2011 of approximately 17%.

In June 14 trading, Graham eclipsed a 52-week high for its share price of $26.18 finishing up $0.65 to $26.28. Bloomberg reported Graham's shares climbed 18% when the news of a then mystery bidder broke, with investors speculating that the new suitor could spark a bidding war. Shares of Silgan fell nearly 5% to $41.06 on the same day.


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