To help it stay on its growth curve, Berry Plastics Corp. is exploring financial alternatives that could include selling the company.
The consumer-packaging company has retained investment banking firms J.P. Morgan Securities Inc. and Credit Suisse First Boston to help Berry evaluate its financial package, said Ira Boots, Berry president and chief executive officer. No time line has been set for a decision, Boots said in a March 21 telephone interview. Berry decided to explore options after more than tripling sales in the past five years, Boots said.
The firm is seeking about $831 million, or about 71/2 times its 2001 earnings before interest, depreciation, taxes, and amortization, according to several sources familiar with the negotiations. The company reported EBIDTA of $110.8 million in 2001. Berry is privately held but has debt that trades on the public market.
Several sources also said Berry's investment advisers are willing to provide financing at 5-51/2 times that EBITDA figure, or $554 million to $609 million.
Berry officials declined to comment on the potential sales price and financing amount.
The company, based in Evansville, Ind., is owned by affiliates of First Atlantic Capital, J.P. Morgan Chase & Co., Aetna Inc. and Berry executives. In 1990, a holding company led by New York-based First Atlantic put together a leveraged buyout of Berry, which had formed under a different name in 1967.
The group refinanced Berry in 1996. Since then, sales at the acquisition-minded injection molder and thermoformer have grown from about $151 million to an estimated $462 million for 2001.
With that growth has come the need to explore new financing, Boots said. The rigid packaging industry in particular has several other large players competing in Berry's core product lines, including drinking cups, aerosol caps, closures, open-top containers and housewares.
``As we've grown our company, we've kept addressing the financial package around us,'' Boots said. ``We're definitely in a different league now, and working in that larger league requires stronger financing.''
Boots emphasized that the review process might not lead to a sale to an outside buyer. The company is considering that option as one alternative, he said.
But proposals are being sought. In the past two weeks, the company has held talks with several financial groups that have expressed interest, sources said. Besides large financial groups, several of which own other packaging companies, the firm could be shopped to competitors. The list could include London-based Rexam plc and Huhtamäki Oyj of Espoo, Finland, both of which are attempting to build a stronger presence in North America. However, those foreign-owned packaging companies have not come forward yet, sources said.
The investment climate is beginning to ease up after a difficult year, said Thomas Blaige, managing director of investment firm Lincoln Partners LLC of Chicago.
``There has been a pent-up demand for liquidity in many packaging companies,'' Blaige said. ``One of the hurdles has been bank financing, and the door is beginning to creep open. Banks are looking for selected opportunities, especially with larger companies.''
That could help Berry in its efforts. The company is strong financially and wants to continue its upward momentum, Boots said. The company now has 13 plants, including two in Europe, and about 3,200 employees. It was ranked 14th on Plastics News' listing of North American injection molders based on 2000 sales.
In January, the company continued its growth by purchasing the injection molding assets of two plants owned by Alcoa Flexible Packaging.
``We expect that our owners are committed to [acquisitions] in the future,'' Boots said.
