Packaging conglomerate Berry Plastics Corp. is considering whether to put itself up for sale, go public or take some other action to benefit shareholders.
The Evansville, Ind., firm announced the potential moves March 29. It said Goldman, Sachs & Co. and JPMorgan, two of its shareholders, will act as financial advisers.
``The company offers no assurance that any transaction will occur or, if one is undertaken, its terms or timing,'' Berry said in a news release. Berry executives will not comment on the process at this time, a spokeswoman said.
Packaging analyst Tim Burns of Cranial Capital Inc. said he thinks a sale makes sense for Berry's major shareholders, which are private equity investors. Such investors typically buy a stake in a company with long-term plans to sell their interest when they can make a profit.
In 2002 an investor group led by GS Capital Partners 2000 LP, a private equity investment fund managed by Goldman, Sachs & Co., bought Berry. The investor group also included JPMorgan Partners Global Investment Fund and Berry's management team.
Burns, based in Solon, Ohio, said recent packaging asset sales point to the likelihood that Berry could attract a good price. Based on a multiple of seven or eight times earnings before interest, taxes, depreciation and amortization, Berry could be worth $1.7 billion to $2 billion in today's marketplace, he estimated in a telephone interview. Not many packaging firms could muster a payment that big, but various companies could be interested in pieces of Berry. Private equity firms could again be interested in the company.
Berry has grown dramatically through acquisition since its inception in 1967 as Imperial Plastics. It became Berry Plastics in 1983 when it was bought by Jack Berry Sr., a citrus grower and real estate developer in Florida, according to the firm's Web site.
One of its biggest recent acquisitions was Landis Plastics Inc., which had thermoforming technology Berry wanted. In the 2003 deal, Landis upgraded Berry's thermoforming capabilities and boosted its injection molding business as well. Berry is investing heavily in thermoforming growth. Early this year it revealed it will invest $118 million in its Packerware division in Lawrence, Kan., which makes housewares, drink cups and food containers.
Last year Berry boosted its packaging products stake by buying Kerr Group Inc. for $445 million. Kerr was an injection molding competitor that added blow molding and tube packaging to Berry's mix.
``They've done a nice job,'' Burns said about Berry's expansion strategy. ``It's a broad product mix but thoughtfully put together.''
The firm's businesses roughly fall into three categories: containers, closures, and consumer products such as open-top containers, aerosol overcaps, drink cups, housewares and specialty molding.
``I am impressed,'' Burns said, adding that Berry has leveraged its strengths in manufacturing, materials and customer base. ``They keep their plants full and at low cost.''