Industrial thermoformer and metals processor Alltrista Corp. has agreed to accept the buyout offer of one of its majority shareholders, Marlin Partners II LP.
Marlin Partners gave Alltrista until the week of May 7 to decide on its offer to buy out 6.35 million existing shares of the company's outstanding stock at $18 per share. The offer translates into an asking price of about $114 million.
Alltrista announced May 7 that it had accepted the deal.
By signing a letter of intent, Alltrista committed to an exclusive negotiation period through June 29, under certain conditions including the execution of a definitive agreement and final due diligence.
Alltrista's stock price has gone from an April 25 price of $14.84 a share to $16.09 on May 8. Marlin's offer was reported April 23.
Indianapolis-based Alltrista had been under scrutiny for some time from Marlin Partners and other majority shareholders to make changes to increase shareholder value and profitability.
Marlin Partners of Rye, N.Y., owned 9.8 percent interest in Alltrista.
With shrinking sales and profit margins, and significant losses within its plastics operations, some shareholders had urged Alltrista to accept Marlin's larger offer of $30 per share when it first was proposed a year ago.
The company reported a first-quarter loss of $238,000 on annual sales of $69 million.
Those losses were hardest on the plastics segment, which includes thermoformed and injection molded packaging, automotive and industrial products. Sales in the plastics division dropped 22.4 percent in fourth-quarter 2000 from the previous year, according to public filings.
"The segments that the plastics division has served have been affected by issues that go beyond the economy; everybody knows it's not a secret that the heavy-truck market is not exactly buoyant at the moment," said Marlin Partners' managing partner Martin Franklin. "All participants in plastics segments have been hurt by swift movement in resin prices.
"We believe the cycle will settle down back into a base level of profitability — the question for us is how long that cycle will be."
Looking forward, Franklin said his firm's first operations objective is resuscitating Alltrista's plastics division.
"We are going to be working as efficiently as possible and [be] focused on the recovery of the plastics segment," he said. "We're excited to have the opportunity to begin our final stages of the investigation into the business in great detail — that process begins today."
Franklin also said he soon will begin plant visits to assess operations before any decisions are made regarding staff or manufacturing changes.
Franklin offered no comment as to whether Alltrista Chief Executive Officer Thomas Clark will resign, as had been urged in a letter last month written by another large shareholder, New York-based Steel Partners II LP.
Franklin also declined to comment on sales and profit-margin goals set for Alltrista, other than to say that "maximization" is the company's ultimate goal.
"This is a business with multiple lines and multiple sectors. We would expect any business to perform at [its] maximum efficiency levels," Franklin said. "I don't throw out [sales and profit goal] numbers."
Franklin said while his firm looks forward to implementing new growth strategies for its newest holding, the company could have been on the road to recovery much sooner.
"The board elected to go through another process as opposed to talking with us directly," Franklin said in a May 8 telephone interview. "At the end of that process we were back to a fairly similar result as when we'd talked to each other in the first place. Hindsight is always 20/20."
Alltrista officials declined comment.