Reynolds buys Pactiv for $6 billion

Reynolds Group Holdings Ltd. (Chicago) has acquired consumer and foodservice packaging manufacturer Pactiv Corp. (Lake Forest, IL) for $6 billion in a deal that pays Pactiv shareholders $33.25/share. That price was 39% higher than Pactiv's close of $23.97 on May 14, before talks were disclosed, according to The New Zealand Herald. Reynolds is a wholly owned subsidiary of New Zealand-based Rank Group Limited, which is owned by Graeme Hart, a Kiwi reported to be the richest person in Australasia.

According to the same New Zealand Herald report, Hart's purchase was highly leveraged, with the entrepreneur borrowing as much as $5 billion to help finance for the Pactiv acquisition. Creditors include Credit Suisse, HSBC, and Australia New Zealand Bank.

Pactiv's board unanimously approved the merger and will recommend its common shareholders follow suit. A special meeting will be held "as soon as practicable" according to Pactiv, with shareholder approval, regulatory approvals, and customary closing conditions targeted to occur by the end of 2010.

Pactiv had 2009 sales of $3.4 billion and derives more than 80% of its sales from market sectors where it is No. 1 or No. 2 in market share. The company's brands include Hefty with products like waste bags, slider storage bags, disposable tableware, and disposable cookware. Reynolds Group supplies consumer food and beverage packaging, as well as storage products, operating four segments: SIG, Evergreen, Reynolds Consumer, and Closure Systems International.