After weeks of speculation and denials, global packaging company Linpac Group Ltd. finally admitted it has agreed to be acquired by investment firm Montagu Private Equity for £860 million ($1.43 billion).
Birmingham, England-based Linpac manufactures automotive parts, materials-handling products and both plastic and paper packaging across five continents, including North America. The company reported 2002 sales of £1.2 billion ($2 billion).
Chief Executive Officer David Williams will become chairman. Current Chairman Michael Cornish, whose father Evan formed the company as a small paper-based food packaging firm in eastern England in 1959, becomes a nonexecutive director of the new company.
Williams said Linpac chose this time to enter a new partnership partly because the Cornish family ``saw succession problems.'' There is no one in the family to carry on the business, he said in a telephone interview.
``Also, we have got to a certain size and it is difficult to grow more as a private [family-owned] company,'' he said.
Looking ahead, Williams said when Linpac achieves annual sales of £2 billion ($3.3 billion), a public stock offering is likely.
London-based Montagu, formerly known as HSBC Private Equity, will hold a majority stake. Linpac senior managers, current family-member shareholders, and employees worldwide will own up to 40 percent of the recapitalized firm.
The friendly takeover, which is still subject to regulatory consent, is scheduled to be wrapped up by August.
Up to a dozen private equity firms had courted the Cornish family, Williams said.
``Partnering with Montagu will enable us to build on the achievements of everyone so far, and ensures a continuing role of the founding families in the operation and ownership of Linpac,'' Williams said. The company intends to expand, both through organic growth and via acquisitions.
Under the new ownership, the company will sell some small peripheral businesses, Williams said.
Linpac has been making new investments in North America, particularly in its film packaging operations in the United States. Paper-based packaging business in the region remains flat, according to Williams.
In Europe, Linpac is extending its recently opened expanded polystyrene food trays operation in Brzeg Dolny, Poland, with investment in a new plant, he said. But growth is slower in mainland Europe, especially in France and Germany.