The Pactiv Corp is to sell most of its North American and European protective and flexible packaging businesses to an affiliate of international private equity firm AEA Investors, for approximately $530M. Product lines involved include air cushioning, air padded mailers, foam, Hexacomb kraft honeycomb, flexible packaging, and hospital supplies.
In 2004, these businesses had sales of $838M and operating income of $60M excluding restructuring and other charges. The company is retaining its European moulded fibre business and Asian operations, which had been part of the Protective and Flexible segment.
"The sale of these businesses represents an important step in Pactiv's strategy to grow its higher return consumer, foodservice, and food packaging businesses," said Richard L Wambold, chairman and ceo." We believe Pactiv will be a stronger, more focused company with increased financial flexibility and better growth prospects as a result of this divestiture."
Over the past few years, the divested businesses are said to have seen improving sales, and margins and to be well positioned for growth as an independent company.
"This is an exciting opportunity for our customers, employees, and new investors," said James D Morris, senior vp and general manager, protective and flexible packaging, who will become ceo of the new venture. "AEA is dedicated to continue to build on the strong market positions of these businesses."
The transaction is expected to close in the third quarter, subject to normal regulatory approvals and customary conditions.
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