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Berry Plastics buys Graphic Packaging unit, sells Kits and Catering business

By: Jim Johnson

October 1, 2013

Berry Plastics Group Inc. is pushing deeper into one business and retreating from another.

The Evansville, Ind.-based company is no stranger to the merger and acquisition market, having made dozens of deals over the years, building annual sales to nearly $5 billion in the process.

And now, the firm likes what it sees in Graphic Packaging Holding Co.'s flexible plastics and film business, which will bring another $100 million or so to Berry Plastic's annual revenue.

But while the company sees growth in that segment of its business, Berry Plastics also has decided to sell off its "Kits and Catering" business to Waddington Group Inc.'s WNA division, a maker of plastic cutlery and dinnerware.

That divested kits and catering business had sales of about $26 million in the last 12 months leading up to June, Berry Plastics indicated.

The growing popularity of flexible packaging caused Berry Plastics to strike a deal with Graphic Packaging.

"As a growing number of companies explore flexible packaging for their products, it is essential that we pursue initiatives which will allow us to meet the increasing demand in this market segment," Berry Plastics CEO Jon Rich said in a statement.

Berry Plastics gains facilities in Des Moines, Iowa; Milwaukee, Wis.; and Schaumburg, Ill., and about 270 workers through the deal. Those locations and employees make wraps, films, pouches and bags for the food, medical, industrial, personal care and pet food markets.

Berry Plastics' existing flexible packaging division makes high-barrier, multilayer film products as well as finished flexible packages. Major customers include companies making food, beverage, medical and personal care products, the company said.

And while the company sees growth potential in the flexible packaging segment, Berry Plastics also decided it was time to move on from the kits and catering business as part of ongoing evaluation of operations.

"During this process, it was determined that our Kits and Catering business would be best affiliated with a company, such as WNA, that is a leader within this market," the CEO said in his statement.

Workers at a site in Bremen, Ga., as well as employees supporting the business have moved over to WNA, Berry said.

But the company also has decided to close its Coon Rapids, Minn., location as part of the sale to WNA, which purchased equipment and inventory from that site.

WNA will move assets from that location to other WNA sites during the next few months as Berry Plastics continues to operate the facility. The Coon Rapids location is expected to close by the end of the year, Berry Plastics said.

This is just the latest in a series of deals for WNA, which was acquired by private equity firm Olympus Partners of Stamford, Conn., about a year ago. The company purchased Eco-Products Inc., a supplier of disposable food service products, in November. That was followed by a deal for Par-Pak Ltd., a thermoformed packaging company, in May.

The company, in August, also revealed plans to invest $21.7 million in its Chattanooga, Tenn., facility.

Berry Plastics did not reveal terms of either deal, and a company spokeswoman could not be reached for comment. Mike Evans, president of WNA, also could not be reached for comment.

In a research note, Senior Analyst Christopher D. Manuel at Wells Fargo Securities estimated the purchase price of the Graphic Packaging business to be $50 million to $75 million. Manuel also indicated Berry Plastics "should achieve its stated goal of harvesting meaningful synergies over the next 12 months."