A second look at Berry Plastics’ $2.45 billion deal

Berry Plastics (Evansville, IN) recently announced its plans to purchase Blackstone-owned Avintiv for $2.45 billion in cash. Avintiv is one of the world's leading developers, producers and marketers of specialty materials used in infection prevention, personal care and high-performance products. The proposed transaction, which is subject to customary closing conditions, is expected to close by the end of calendar year 2015.

PlasticsToday reached out to Berry Plastics to answer some questions about its latest acquisition.

What is the strategy behind this recent acquisition?

Berry Plastics: Avintiv is a natural and synergistic fit with Berry Plastics and adds a new business line to our product portfolio. There are several factors that made Avintiv an attractive and strategic acquisition.

        -Nine out of the top ten Avintiv customers are also substantial Berry customers today.

                -Both companies have leading product offerings in healthcare, personal care and engineered materials.

-Avintiv today is the industry leader in polypropylene nonwoven fabric, while Berry is among the largest molders of polypropylene in the world. Combined, we will source and convert nearly 2 billion pounds of polypropylene per year.

Does the closing of Berry's Iowa Falls’ lid and containers plant early July have anything to do with this recent acquisition as the company enters into the global medical arena? Will there be any more equity sold off?

Berry Plastics: The decision to close Berry Plastics’ Iowa Falls facility is not related to the Company’s decision to acquire Avintiv.

How will this affect Berry's Evansville operations?

Berry Plastics: The acquisition of Avintiv will have no impact on our Evansville operations.

Will Avintiv’s five U.S. plants continue to remain in operations?

Berry Plastics: We do not anticipate closing any of Avintiv’s operations.  We look forward to working with the current Avintiv employees as we integrate their facilities into Berry Plastics.

What do you contribute net sales being down 4% for the quarter over last year?

Berry Plastics: As reported in our quarterly call with the investment community, the 4% decrease was primarily attributed to a decrease in selling prices to the pass-through of lower raw material costs, a negative impact from changes in currency exchange rates, and weak customer demand that was partially offset by revenue from our acquisition of the healthcare containers and closures business purchased from Rexam in June 2014 and volume gains in certain of our product categories.