By: Don Loepp
February 7, 2014
Plymouth, Mich.-based Plastipak Packaging Inc. has emerged as the successful bidder for the U.S. assets of blow molder Constar International Holdings LLC.
Plastipak will pay $102.45 million for Constar's assets, according to a Feb. 6 asset purchase agreement.
According to court documents, Judge Christopher Sontchi in the U.S. Bankruptcy Court in Wilmington, Del., is scheduled to approve Plastipak's bid on Feb. 10. Trevose, Pa.-based Constar had filed for Chapter 11 protection from creditors on in December.
The sale of Constar's assets started in bankruptcy court, but they ended up in a bidding war between two of North America's largest blow molders.
Hawthorn, Australia-based Amcor Ltd. originally looked like it was going to end up the winner. It was the stalking horse bidder when Constar first filed for protection on Dec. 19. Amcor is North America's largest blow molder, according to Plastics News data — the company's regional headquarters is in Ann Arbor, Mich.
But Constar said the transaction with Amcor was subject to higher and better offers, and within a few weeks after the deal was announced, two other potential bidders emerged: Plastipak and Atlanta-based CKS Packaging Inc. Both filed objections with the court over the rules Amcor and Constar had set up for the sale.
On Feb. 6, Amcor announced that it was dropping its bid for Constar. An Amcor spokesman explained to Plastics News that it had been outbid by another company. At the time, the spokesman would not name the actual buyer.
He would not say how much the winning company paid, but said "at the end of the day the nature of an auction is that the winning bid doesn't have to be much more than the losing one.
"At a certain price it no longer fits the criteria. Amcor has a well-defined returns focus for investments and will remain disciplined in its approach to acquisitions," he said.
"Constar went into bankruptcy and part of the process was for liquidators to establish the best possible price."
Industry sources suggest Constar would have been a relatively small bolt-on acquisition for Amcor. According to Amcor, Constar's U.S. business now has six plants and annualized sales of about US$190 million.
Still, the deal generated attention in the packaging sector, in part because of their history. Constar was a pioneer in the PET bottle business, and a few decades ago Constar and Amcor's U.S. predecessor — Johnson Controls Inc. — were major rivals and the top two blow molders in North America, according to Plastics News' rankings.
The PET market has changed significantly since then, though. Today Amcor and Plastipak have leading positions, but many of their customers, including soft drink and bottled water bottlers, now have their own bottle manufacturing operations.
Plastipak was North America's No. 3 blow molder in Plastics News' most recent ranking, with 13 plants and sales of $1.65 billion.
Correspondent Kate Tilley contributed to this report.