Mystery bidder seeks to derail Silgan’s takeover of Graham Packaging

By Rory Harrington

- Last updated on GMT

Related tags Graham packaging Proposal Stock

Mystery bidder seeks to derail Silgan’s takeover of Graham Packaging
Silgan Holdings’ proposed US$1.3bn take over of Graham Packaging was under threat yesterday after a mystery bidder stepped in with a higher offer for the rigid packaging outfit.

Reports suggested that Rank Group, owned by New Zealand tycoon Graham Hart, was the unnamed source behind an unsolicited $1.64bn bid for Graham Packaging.

The privately-owned company is no stranger to big-money deals. Last year, it acquired Pactiv for $4.6bn. Rank also bought Alcoa Packaging & Consumer Group for $2.7bn in 2008.

The offer for Graham Packaging of $25 per share represents a 13 per cent increase on the proposal lodged earlier this year by US-based Silgan. The new bid triggered an 18 per cent rise in Graham shares, which were trading at over $25 when the New York Stock Exchange closed yesterday.

Graham Packaging yesterday revealed its board of directors appeared to back the new offer after concluding “this proposal could reasonably be expected to lead to a proposal that is superior to the pending transaction with Silgan”.

The company added the offer was subject to due diligence and there was no guarantee it would result in a definitive agreement.

The board of directors has not changed its recommendation with respect to the pending transaction with Silgan, it said.

Silgan said that if Graham Packaging backed out of its agreement it would have to pay it a termination fee of $39.5m.

However, it is by no means certain that Silgan will bow out as it stressed that should the Graham board accept the new offer, Silgan would have to be given the opportunity to make a counter bid.

"Even assuming Silgan's offer is upped to $26/share, the transaction is still comfortably accretive (to Silgan) ... though it's unlikely the company would dramatically increase the offer,"​ Robert W. Baird analyst Ghansham Panjabi told Reuters.

Related topics Processing & packaging

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