Berry Plastics Corp. plans to buy Pliant Corp. after Pliant emerges from bankruptcy.
Under a reorganization plan approved Oct. 6 in U.S. Bankruptcy Court in Wilmington, Del., Berry will receive 25 percent of the equity of Pliant. Berry intends to acquire the remaining 75 percent of the common stock as well, Berry said in an Oct. 13 news release.
Pliant will remain separately capitalized as an unrestricted subsidiary of Berry, the release said.
New York-based private equity firm Apollo Management LP owns stakes in both packaging film extruder Pliant and Berry, a major North American injection molder, film extruder and thermoformer.
Schaumburg, Ill.-based Pliant employs 2,900 at 18 manufacturing plants worldwide. It reported 2008 sales of $1.1 billion.
Evansville, Ind.-based Berry employs 13,400 and operates 66 plants.
Berry's acquisition of Pliant would help to consolidate and stabilize pricing in a fragmented flexible packaging industry, said Will Frame, managing director in Chicago for the paper, plastics and packaging unit of Detroit-based Deloitte & Touche Corporate Finance LLC.
In the ideal world, it creates a virtuous circle where benefits of scale, well-capitalized machinery, and the expertise Berry brings would give customers high-quality, low-cost products, Frame said in an Oct. 15 telephone interview. Those same dynamics make it in Berry's interest to hold line of price and have price discipline, such that lower-cost producers of film make reasonable returns.
Berry, too, would expect higher returns on investment in such a scenario, he said.
Berry Chairman and CEO Ira Boots said: Pliant Corp. brings to Berry an important group of customers, employees, manufacturing locations and products. Their film product line enhances Berry's current offering with innovation and broader market appeal. Berry's rigid plastic packaging offering will be extended with the addition of Pliant's flexible packaging.
With Berry acquiring Pliant, customers will be better served with a financially strengthened, full-service company, Boots said in the news release.
The deal is scheduled to close by the end of the year.
A report last month on the Debtwire news service speculated that Apollo Management might be preparing for an eventual initial public offering for Berry Plastics, to cash in on its investments in both Berry and Pliant.
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