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Hart buys Pactiv for $8.43b

Wednesday 18th August 2010

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Billionaire Graeme Hart's Rank Group will pay about US$6 billion (NZ$8.43 billion) for Chicago-based packaging company Pactiv.

In a notice to the New York Stock Exchange, Pactiv said Rank subsidiary Reynolds Group Holdings will pay US$33.25 a share, valuing the equity at about US$4.42 billion, as well as assuming Pactiv's debt.

The price per share is a premium of about 39% over Pactiv's closing price on May 14, the last trading day before reports on a potential transaction. The Wall Street Journal reported both Georgia Pacific and Rank were interest in Pactiv.

Pactiv shares last traded on the NYSE at US$32.58.

“Pactiv is an outstanding company. It is a clear leader in its markets as a result of its broad product line and unique distribution system,” Hart said in a statement.

“I am excited about the opportunity to grow Pactiv's foodservice and Hefty consumer businesses.”

The deal will be financed by equity from Reynolds and Rank and committed debt financing from Credit Suisse, which has been advising Pactiv, HSBC and ANZ Bank.

The offer is subject to Pactiv shareholder approval and the company's board is recommending it. Directors are targeting the transaction will be completed by the end of 2010.

If the deal falls through, Pactiv will have to pay Reynolds anywhere between US$150 million and US$500 million, depending on the circumstances.

Hart has been in the process of building a global packing business since 2007.

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