Hefty trash bag maker Pactiv agrees to $4.4 billion takeover by Reynolds Group

Pactiv agrees to $4.4B takeover by Reynolds Group

LAKE FOREST, Ill. — Reynolds Group, part of the global packaging business owned by New Zealand’s richest man, said Tuesday it will pay about $4.4 billion for Pactiv, the maker of the Hefty brand trash bags.

With debt included, the acquisition is valued at around $6 billion.

It’s the latest and biggest in a string of deals that has built Reynolds parent company Rank Group Ltd. into a worldwide packaging empire under owner Graeme Hart.

Reynolds Group Holdings Ltd., a Chicago-based subsidiary, is offering Pactiv shareholders $33.25 per share in cash.

That’s a premium of about 8 percent over Pactiv’s closing share price of $30.92 on Monday. But it’s 39 percent higher than the closing price May 14, the last trading day before reports of a potential deal.

Reynolds, which expects to close the acquisition in the fourth quarter, said it will finance the deal with $5 billion of new debt from affiliates of Credit Suisse, HSBC, and Australia New Zealand Bank.

Shares of Pactiv Corp., based in Lake Forest, Ill., jumped $1.70, or 5.5 percent, to $32.62 Tuesday.

Hart, whose estimated $5.3 billion fortune earned him the No. 144 spot on Forbes magazine’s list of the world’s richest people, started bulking up Rank Group’s packaging business back in 2007 when it agreed to buy SIG, a Swiss food-packaging company. In 2008, Rank paid $2.7 billion for the food-packaging division of Alcoa Inc., which included Reynolds.

In April, Hart began to consolidate his holdings in the industry, looking to raise $1.75 billion so that Reynolds could buy two other companies that Hart already owns, U.S.-based Evergreen Packaging and a paper mill in the New Zealand city of Whakatane.