Skip to main content
Sister Publication Links
  • Sustainable Plastics
  • Rubber News
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Processor News
    • Suppliers
    • More News
    • Digital Edition
    • End Markets
    • Special Reports
    • Newsletters
    • Videos
    • Podcasts
    • Injection Molding
    • Blow Molding
    • Film & Sheet
    • Pipe/Profile/Tubing
    • Rotomolding
    • Thermoforming
    • Recycling
    • Machinery
    • Materials
    • Molds/Tooling
    • Product news
    • Design
    • K Show
    • Mergers & Acquisitions
    • Sustainability
    • Public Policy
    • Material Insights Videos
    • Numbers that Matter
    • Automotive
    • Packaging
    • Medical
    • Consumer Products
    • Construction
    • Notable Leaders in Sustainability
    • Processor of the Year
    • Best Places to Work
    • Women Breaking the Mold
    • Rising Stars
    • Diversity
    • Most Interesting Social Media Accounts in Plastics
  • 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
    • Plastics News Events
    • Industry Events
    • Injection Molding & Design Expo
    • Livestreams/Webinars
    • Editorial Livestreams
    • Ask the Expert
    • Plastics News Events Library
    • Plastics News Executive Forum
    • Injection Molding & Design Expo
    • Plastics Caps + Closures: A Global Online Event
    • Women Breaking the Mold Networking Forum
    • Bioplastics Live
    • Numbers that Matter Live
    • PFAS Live
    • Plastics in Politics Live
    • PN Live: Mergers and Acquisitions
    • Polymer Points Live
    • Sustainable Plastics Live
    • Plastics Caps & Closures Library
    • Plastics in Healthcare Library
    • Women Breaking the Mold Networking Forum Library
  • 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
  • Resin Prices
    • Resin Prices Overview
    • Commodity Thermoplastics
    • High Temperature Thermoplastics
    • Engineering Thermoplastics
    • Recycled Plastics
    • Thermosets
    • Europe - Virgin
    • Europe - Recycled
    • Europe - Feedstock
  • 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
September 08, 2021 01:30 PM

Pactiv Evergreen says $380M acquisition of Fabri-Kal ‘made a lot of sense'

Jim Johnson
Senior Reporter
Plastics News Staff
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Fabri-Kal Corp.

    About three quarters of Fabri-Kal's sales are to the foodservice industry.

    Pactiv Evergreen Inc. says it is facing challenges brought on by the pandemic, inclement weather and labor shortages, but the acquisition of Fabri-Kal Corp. was too attractive to pass up. So Pactiv is buying Fabri-Kal in a $380 million acquisition that initially will add to its debt level, but then immediately help the new owner's bottom line.

    Lake Forest, Ill.-based Pactiv Evergreen said Sept. 8 the purchase is expected to close late in the third quarter or early in the fourth quarter.

    News of the purchase comes on the same day Pactiv Evergreen told the market not to expect as much profit from the company this year as previously anticipated.

    But purchasing Fabri-Kal, the 11th-largest thermoformer in North America, according to Plastics News data, is expected to bring cost savings to the combined company.

    Pactiv Evergreen is the largest thermoformer in North America, according to the latest PN ranking, with an estimated $2.6 billion in annual sales.

    "The largest bucket of synergies is the operational synergies. We've taken a very close look at the Fabri-Kal facilities and the Pactiv Evergreen facilities and we think there is opportunity to get a lot more production out of both by combining the production footprint," said Mike Ragen, who serves as both chief operating officer and chief financial officer at Pactiv Evergreen. "I'm not saying closing plants when I say that. It's more about moving product around between the facilities.

    "That's the bulk of it," he said.

    A total of 72 percent of Fabri-Kal's business is in foodservice and the remaining 28 percent is in consumer products.

    Fabri-Kal Corp.
    Pactiv Evergreen will add 1,000 employees at four factories with the Fabri-Kal acquisition.

    Fabri-Kal, of Kalamazoo, Mich., has annual sales of $334 million. The purchase, Pactiv Evergreen said, "is subject to adjustments for cash, working capital and indebtedness." Fabri-Kal has four manufacturing sites in the United States and about 1,000 employees.

    While Pactiv Evergreen is not talking about closing sites, the company told stock analysts on a conference call to announce the deal there continues to be problems attracting enough workers around the company.

    "The labor [shortage] is inhibiting our sales. Over the last few months, we have dramatically reduced our inventories because we have been selling more than we have been producing," Ragan said.

    "The assumption that we had most recently was that we would get more labor back in, and it's been very difficult. So we've taken a breath. We're continuing to push down that path, but we're sitting here saying, 'Realistically, by the end of the year, where do we think our production levels will be,' and we've adjusted for that," Ragen said.

    Pactiv Evergreen expects to use a combination of debt and cash on hand to pay for Fabri-Kal.

    The company's latest earnings guidance is for adjusted earnings before interest, taxes, depreciation and amortization to come in at $550 million for the full 2021 fiscal year. It was only in early August, during the company's second-quarter earnings conference call, that Pactiv Evergreen said it expected adjusted EBITDA to come in at $630 million to $645 million for the full year.

    Company officials were asked why they decided to buy Fabri-Kal at a time when Pactiv Evergreen is facing its own set of financial challenges. CEO Mike King essentially said this deal was very specific and the company is not casting a wide net in search of deals these days.

    "I would say we're taking rifle shots. Fabri-Kal is something that came up several quarters ago and was something we looked at a long time before we acted. I would say that's the mode we are in," he said.

    "This one made a lot of sense," King said. "This one, obviously, is deleveraging. There aren't many of those out there I would say."

    Fabri-Kal's product line includes drinking cups, lids, portion cups and containers. It was founded in 1950 by Robert Kittredge. The sale will move the family-owned business into a publicly traded company.

    Pactiv Evergreen is the former Reynolds Group Holdings Ltd. It went public last year as part of a larger push by billionaire Graeme Hart to pay down debt on his vast holdings. The company has 53 manufacturing sites and a portfolio of 13,000 products, including food containers, plates, bowls, cups, lids, wraps, cutlery, trays and egg cartons.

    RECOMMENDED FOR YOU
    Play Mart expanding in Kentucky, adding jobs
    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
    Ohio PET jar maker closes, auctioning off equipment
    2
    An 8,000-ton dream for Milacron, 20/20 Custom Molded Plastics
    3
    Nova declares force majeure for PE resin at second Ontario site
    4
    Preventing pellet pollution focus of expanded Operation Clean Sweep, congressional push
    5
    PS resin prices continue their climb
    SIGN UP FOR OUR FREE NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Find more newsletters at plasticsnews.com/newsletters.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    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
    • Tire Business
    • Urethanes Technology
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Copyright © 1996-2023. 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
        • K Show
        • Mergers & Acquisitions
        • Sustainability
        • Public Policy
        • Material Insights Videos
        • Numbers that Matter
      • Digital Edition
      • End Markets
        • Automotive
        • Packaging
        • Medical
        • Consumer Products
        • Construction
      • Special Reports
        • Notable Leaders in Sustainability
        • Processor of the Year
        • Best Places to Work
        • Women Breaking the Mold
        • Rising Stars
        • Diversity
        • Most Interesting Social Media Accounts in Plastics
      • Newsletters
      • Videos
      • Podcasts
    • 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
      • Plastics News Events
        • Plastics News Executive Forum
        • Injection Molding & Design Expo
        • Plastics Caps + Closures: A Global Online Event
        • Women Breaking the Mold Networking Forum
      • Industry Events
      • Injection Molding & Design Expo
      • Livestreams/Webinars
      • Editorial Livestreams
        • Bioplastics Live
        • Numbers that Matter Live
        • PFAS Live
        • Plastics in Politics Live
        • PN Live: Mergers and Acquisitions
        • Polymer Points 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
    • 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
    • Resin Prices
      • Resin Prices Overview
      • Commodity Thermoplastics
      • High Temperature Thermoplastics
      • Engineering Thermoplastics
      • Recycled Plastics
      • Thermosets
      • Europe - Virgin
      • Europe - Recycled
      • Europe - Feedstock
    • 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