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Graham Packaging plans to go with Reynolds offer


Graham Packaging Co. Inc. plans to accept a buyout offer from New Zealand's Reynolds Group Holdings Ltd., breaking a previous agreement to sell itself to Connecticut-based Silgan Holdings Inc. 


Graham, based in York, Pa., said it had determined that Reynolds' buyout offer of about $1.64 billion is superior to Silgan's, and that it had informed Silgan of its decision on Monday.


Silgan has the right to make a better offer by the end of Thursday (June 16, 2011), according to both Graham and Silgan. Silgan has also said that Graham will have to pay a $39.5 million breakup fee if it backs out of the Silgan deal.


Reynolds, the company that makes Reynolds Wrap aluminum foil, offered to pay $25 per share in cash for Graham.


Silgan in April had offered a cash-and-stock deal that was worth $19.56 per share at the time. However, that deal was worth about $21.08 per share at the end of Monday, because Silgan's stock has risen since it made the offer. That would make Silgan's deal worth $1.38 billion.


Silgan, which is based in Stamford, Conn., makes shampoo bottles, bottle caps, and other packing products.


Reynolds said Tuesday it would gain "strategic benefits" and cost savings by buying Graham, which makes containers for items as varied as salsa, chocolate syrup and laundry detergent.


Shares of Graham Packaging rose 41 cents, or 1.6 percent, to $26.04 in morning trading Tuesday while Silgan shares fell 41 cents, or 1 percent, to $40.21.

 

Source: The Associated Press

 

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