RGHL confirms 'approach' to buy SIG Combibloc: $5bn price tag rumored

By Ben BOUCKLEY contact

- Last updated on GMT

SIG Combibloc's facility in Paraná state, Brazil
SIG Combibloc's facility in Paraná state, Brazil

Related tags: Goldman sachs

Reynolds Group says it will perform a strategic review of the world’s second-largest carton producer SIG Combibloc after an approach by an unnamed suitor looking to buy the business.

The packaging conglomerate – owned by New Zealand’s wealthiest man, the media shy Graeme Hart – announced the news in a US Securities & Exchange Commission Filing yesterday.

Announcing the strategic review of “certain packaging businesses” ​yesterday, Reynolds Group Holdings (RGHL) said this covered Evergreen Packaging (America's largest producer of consumer juice and milk cartons) and RGHL's closures businesses.

The company said the initiative “is part of a review and possible reallocation of capital and resources within its business portfolio”.

“In addition, as a result of an approach received, RGHL has decided to also undertake a strategic review of its SIG business,”​ the firm added.

“Bot reviews may result in a decision to sell some or all of those businesses, although no decision has been made at this time to do so,”​ RGHL said in its filing.

Early last month, Reuters reported, citing unnamed sources, that Hart was exploring a possible sale of SIG (the world No.2 behind Tetra Pak in paperboard drinks cartons) for a mooted figure of $5bn, and had hired bankers Goldman Sachs to assess its future.

The rumored price is based on a x10 EBITDA multiple - SIG reported annual earnings of $543m in 2013, up 9% year-on-year, due to higher sales volumes and cash earnings from joint ventures.

He bought SIG for $2.3bn in 2007 but is reportedly under pressure to reduce debt, having borrowed heavily to finance other major recent acquisitions – Pactiv Corp for $6bn in 2010 and Graham Packaging for $4.5bn in 2011.

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