Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Resin pricing news
    • Videos
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • CEO Issue
    • Diversity
    • Best Places to Work
      • 2022 winners
    • Processor of the Year
    • Rising Stars
    • Women Breaking the Mold
      • 2022 class
  • Opinion
    • The Plastics Blog
    • Kickstart
    • One Good Resin
    • Pellets and Politics
    • All Things Data
    • Viewpoint
    • From Pillar to Post
    • Perspective
    • Mailbag
    • Fake Plastic Trees
  • Shop Floor
    • Blending
    • Compounding
    • Drying
    • Injection Molding
    • Purging
    • Robotics
    • Size Reduction
    • Structural Foam
    • Tooling
    • Training
  • Events
    • K Show Livestream
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Processor of the Year submissions
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics News Caps & Closures
    • Women Breaking the Mold Networking Forum
    • Plastics in Automotive
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Numbers that Matter Live
    • Plastics in Politics Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • Resin Prices
    • All Resins
    • Commodity TPs
    • High Temp TPs
    • ETPs
    • Thermosets
    • Recycled Plastics
    • Historic Commodity Thermoplastics
    • Historic High Temp Thermoplastics
    • Historic Engineering Thermoplastics
    • Historic Thermosets
    • Historic Recycled Plastics
  • Rankings & Data
    • Injection Molders
    • Blow Molders
    • Film Sheet
    • Thermoformers
    • Pipe Profile Tubing
    • Rotomolders
    • Mold/Toolmakers
    • LSR Processors
    • Recyclers
    • Compounders - List
    • Association - List
    • Plastic Lumber - List
    • All
  • Directory
  • Custom
    • Sponsored Content
    • LS Mtron Sponsored Content
    • Conair Sponsored Content
    • KraussMaffei Sponsored Content
    • ENGEL Sponsored Content
    • White Papers
    • Classifieds
    • Place an Ad
    • Sign up for Early Classified
MENU
Breadcrumb
  1. Home
  2. News
April 16, 2007 02:00 AM

Pactiv paying $1 billion to acquire Prairie

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Pactiv Corp. of Lake Forest, Ill., scored a coup in the world of plastics disposable tableware, acquiring a company it has courted for nearly seven years in a $1 billion debt-financed transaction.

    Pactiv's April 12 announcement that it is taking over Prairie Packaging Inc. of Bedford Park, Ill., means Prairie's founders, the Shapiro family, will step aside. Although other management will stay intact, patriarch Earl Shapiro is retiring and sons Ben and Matthew are undecided about what their future holds.

    The transaction is expected to close in the second quarter.

    ``We've told [Pactiv] that we're very happy to assist in any transition,'' Ben Shapiro said in a telephone interview. ``Pactiv can provide that management and capital that industry can support and that customers require. In Pactiv, we believe we found the perfect successor to keep that growth model.''

    The numbers show a business that has been well-managed since its 1987 founding. Prairie in 2007 will produce $500 million in sales with a profit margin around 20 percent, predicts analyst Ghansham Panjabi of Wachovia Capital Markets LLC in New York.

    Prairie's earnings before interest, taxes depreciation and amortization are 23 percent, compared with Pactiv's 20 percent, Panjabi wrote in an April 12 research note.

    The purchase price is roughly 8.6 times Prairie's 2007 expected EBITDA of $116 million, Pactiv officials said during an April 12 conference call.

    ``This is a large acquisition for Pactiv,'' said Pactiv Chairman and Chief Executive Officer Richard Wambold. ``It's one that the management team will be focusing on and giving its full attention to. We've been negotiating with and getting to know this company for six years to seven years. The fit is as good as it gets.

    ``This is probably the best opportunity in the market today for Pactiv. The synergies will be excellent on the cost side and in terms of long-term growth.''

    During the past few years, Pactiv has elected to pass on other deals, officials said. On a long-term basis, free cash flow will be 8-10 percent of Prairie's total sales.

    ``Prairie is truly an economically favorable deal,'' Wambold said. ``This is an excellent example of what patience can yield.''

    Pactiv officials have been straightforward in their approach to growth. Since 2000, the company has spent $323 million on acquisitions, according to its 2006 annual report. Rather than build new facilities or invest in other ways to grow the business organically, the firm obtained what Wambold called ``instantaneous critical mass'' through Prairie.

    ``To do the same thing internally, we probably wouldn't really have a great return on it,'' he said. ``We're really happy with this way of accomplishing the goal.''

    Prairie constantly has reinvested in machinery and automation, and Pactiv will continue that strategy. Prairie's newest facility, in Charlotte, N.C., will undergo an expansion, Wambold said.

    ``Eventually, we'll think about where we'll go next - possibly the West Coast,'' he said.

    Pactiv also will adopt automation tricks from Prairie's five plants at Pactiv's existing facilities. Prairie's operations include injection molding and thermoforming. It employs 1,200.

    The principle difference between the Pactiv and Prairie cultures is that Prairie is very aggressive in getting things done, Wambold said.

    ``That's a part of their culture that we want to embrace, as opposed to remove,'' he said.

    Prairie makes higher-margin products. Its sales are split 60-40 between food-service and consumer products, respectively. Pactiv's sales are split 63-37 in food-service/food-packaging and consumer products, respectively.

    In terms of customer mix, Pactiv sells to Wal-Mart Stores Inc., which accounted for 16 percent of Pactiv's sales in 2006. Prairie sells to Sam's Club, but not to Wal-Mart.

    Panjabi rated publicly held Pactiv's stock at outperform. He also said Pactiv is likely to consolidate the food-service packaging market further during the next few years.

    RECOMMENDED FOR YOU
    Nexus executive: Industry must deliver on promise of chemical recycling
    Letter
    to the
    Editor

    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Plastics News would love to hear from you. Email your letter to Editor at [email protected]

    Most Popular
    1
    DOJ files criminal charges against ABC Polymer over worker death
    2
    Pregis to close Kentucky sheet foam plant, blames lack of material
    3
    Challenges persist in resin distribution
    4
    Charter Next Generation buys Ohio films business
    5
    Auto suppliers asking for contract relief
    SIGN UP FOR TO RECEIVE THESE EMAILS AND ENEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Plastics News delivered straight to your inbox, free of charge.

    Subscribe today

    Subscribe to Plastics News

    Subscribe now
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter
    • Instagram

    Plastics News covers the business of the global plastics industry. We report news, gather data and deliver timely information that provides our readers with a competitive advantage.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI 48207-2997

    Customer Service:
    877-320-1723

    Resources
    • About
    • Staff
    • Editorial Calendar
    • Media Kit
    • Data Store
    • Digital Edition
    • Custom Content
    • People
    • Contact
    • Careers
    • Sitemap
    Related Crain Publications
    • Sustainable Plastics
    • Rubber News
    • Urethanes Technology
    • European Rubber Journal
    • Tire Business
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • News
      • Processor News
        • Injection Molding
        • Blow Molding
        • Film & Sheet
        • Pipe/Profile/Tubing
        • Rotomolding
        • Thermoforming
        • Recycling
      • Suppliers
        • Machinery
        • Materials
        • Molds/Tooling
        • Product news
        • Design
      • More News
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • CEO Issue
        • Diversity
        • Best Places to Work
          • 2022 winners
        • Processor of the Year
        • Rising Stars
        • Women Breaking the Mold
          • 2022 class
      • Newsletters
      • Resin pricing news
      • Videos
    • Opinion
      • The Plastics Blog
      • Kickstart
      • One Good Resin
      • Pellets and Politics
      • All Things Data
      • Viewpoint
      • From Pillar to Post
      • Perspective
      • Mailbag
      • Fake Plastic Trees
    • Shop Floor
      • Blending
      • Compounding
      • Drying
      • Injection Molding
      • Purging
      • Robotics
      • Size Reduction
      • Structural Foam
      • Tooling
      • Training
    • Events
      • K Show Livestream
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics News Caps & Closures
        • Women Breaking the Mold Networking Forum
        • Plastics in Automotive
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
        • PN Live: Mergers and Acquisitions
      • Editorial Livestreams
        • Polymer Points Live
        • Numbers that Matter Live
        • Plastics in Politics Live
        • Sustainable Plastics Live
      • Ask the Expert
      • Plastics News Events Library
        • Plastics Caps & Closures Library
        • Plastics in Healthcare Library
        • Women Breaking the Mold Networking Forum Library
      • Processor of the Year submissions
    • Resin Prices
      • All Resins
      • Commodity TPs
        • Historic Commodity Thermoplastics
      • High Temp TPs
        • Historic High Temp Thermoplastics
      • ETPs
        • Historic Engineering Thermoplastics
      • Thermosets
        • Historic Thermosets
      • Recycled Plastics
        • Historic Recycled Plastics
    • Rankings & Data
      • Injection Molders
      • Blow Molders
      • Film Sheet
      • Thermoformers
      • Pipe Profile Tubing
      • Rotomolders
      • Mold/Toolmakers
      • LSR Processors
      • Recyclers
      • Compounders - List
      • Association - List
      • Plastic Lumber - List
      • All
    • Directory
    • Custom
      • Sponsored Content
      • LS Mtron Sponsored Content
      • Conair Sponsored Content
      • KraussMaffei Sponsored Content
      • ENGEL Sponsored Content
      • White Papers
      • Classifieds
        • Place an Ad
        • Sign up for Early Classified