Flexible packaging manufacturer Ivex Packaging Corp. is quietly shopping for a possible suitor, according to several outside sources familiar with the company's decision.
While Ivex officials did not respond to two telephone inquiries, several sources said the Lincolnshire, Ill.-based company would like to receive a minimum of $22-$23 a share for the company to consider a sale, putting the sale price at close to $500 million.
But Ivex would like to fetch more than that and attract closer to $800 million to $900 million. Bids are being received now, sources said.
On Feb. 7, Ivex stock was trading at $21 a share on the New York Stock Exchange, near its 52-week high.
Ivex has hired two investment firms, Deutsche Bank AG and Merrill Lynch & Co., to look for a buyer and would like to sell the company in one piece, several sources said. Possible candidates to buy Ivex, a maker of oriented polystyrene sheet and film and thermoformed PS and paperboard packaging, could include Lake Forest, Ill.-based Pactiv Corp., Saddle Brook, N.J.-based Sealed Air Corp. and Espoo, Finland-based Huhtamaki Oyj.
Spokespeople for Pactiv and Sealed Air did not return a telephone call seeking comment.
The company attempted to sell off its operations a year ago but pulled back after finding no buyers, several sources said.
Ivex stock now is trading at a premium and sales have been healthy. But the company also is moderately leveraged with debt, and it is more serious about a sale this go-around, sources said.
``To take Ivex to the next level, they need to build up their infrastructure to compete on the national level,'' a source said. ``They can't do that themselves realistically with their level of debt.''
Ivex recorded 2001 sales of $642.9 million and profit of $25.9 million - which is about 20 percent higher than profit in 2000.
In a Jan. 24 conference call with investors, the company said it was pleased with its 2001 financial results and did not say that it was for sale. Other small equity firms had not heard that Ivex was on the market.
Yet, a sale would not be a complete surprise, said Ken Brooks, vice president of Ernst & Young Corporate Finance Inc. in Montreal. However, one strategic buyer for Ivex's three primary divisions - consumer, paper and protective packaging - would be unlikely, he said.
``The consolidation process in a lot of packaging-related areas came to a near halt in 2001, even before Sept. 11,'' said Brooks, who said he had no knowledge of the Ivex situation. ``As the economy starts to recover and capital markets loosen up [this year], we'll see more consolidation activity.''
Both the thermoforming and the film businesses would be attractive to possible buyers but probably as separate entities, added Thomas Blaige, managing director of Chicago-based investment bank Lincoln Partners LLC.
``If they sold it, I don't think it would be a one-shot deal,'' said Blaige, who also expressed no knowledge of whether Ivex was on the sale block. ``There's been a big surge in [plastics] transactions since Sept. 11.''