Graham Packaging Company Inc. (NYSE: GRM) today announced the signing of a definitive merger agreement under which Graham Packaging will be acquired by Silgan Holdings Inc. in a cash-and-stock transaction valued at $19.56 per share, or a total of approximately $4.1 billion including assumed indebtedness. The deal is expected to close in the second half of this year.
The combined company will create a leading worldwide food and beverage franchise and a strong supplier of metal cans, closures, and rigid plastic containers. The combined company will employ over 17,000 associates in 19 countries through a network of approximately 180 plants and will have annual sales in excess of $6.2 billion. With its broad and diversified product offerings, the combined company will be better positioned to provide a portfolio of packaging solutions for its customers and more effectively service those customers ever changing needs. Likewise, the combination will help strengthen the merged entities' ability to deliver consistent and stable earnings growth that will result in long term shareholder value accretion.
Graham Packaging's commitment to innovation and technology has enabled us to build a differentiated company that has become a leader in the markets that we service for our global customers, said Mark Burgess, Graham Packaging's CEO. Likewise, our focus on operating excellence and disciplined business management has allowed Graham to successfully improve its performance and metrics significantly, resulting in our initial public offering last year. In combination with Silgan, we look forward to servicing customers even more effectively and providing them with sustainable and innovative packaging solutions that help them create winning products for the consumer. We are excited about the opportunities provided by the business combination and the advantages and complementary factors associated with our businesses.
Terms of the Agreement
Under the terms of the merger agreement, each outstanding share of Graham Packaging common stock will be converted into the right to receive $4.75 in cash and 0.402 shares of Silgan common stock, subject to the terms of the merger agreement. Based on the closing price of Silgan stock as of April 12, 2011, the stock component is valued at $14.81 per share. The transaction provides immediate value to Graham Packaging shareholders through the cash component, as well as continued participation in the future prospects of the combined company through their ownership of approximately 29 percent of Silgan's shares.
At the closing of the merger, the surviving corporation will be making an aggregate cash payment of $245 million pursuant to contractual change in control provisions in the Company's income tax receivable agreements with Blackstone Capital Partners III L.P. and the Graham family. These agreements were entered into prior to Graham Packaging's February 2010 IPO, and reference is made to the Company's prior public filings for further information concerning such agreements.
The transaction was unanimously recommended by a special committee of the Graham Packaging Board of Directors and was then unanimously approved by Graham's full Board of Directors. Consummation of the transaction is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Graham Packaging and Silgan stockholders.
When the merger is completed, Graham Packaging Company L.P., which is the issuer of various series of notes, will merge with and into the surviving corporation in the merger, which corporation will succeed to such issuer's obligations under such indebtedness.
Advisors
Simpson Thacher & Bartlett LLP served as legal counsel to Graham Packaging. Abrams & Bayliss LLP acted as legal advisor and J.P. Morgan Securities, LLC acted as financial advisor to the special committee of the board of directors of Graham Packaging.
| Graham Packaging: David Bullock Chief Financial Officer +1 (717) 849-8500 Jeff Grossman +1 (717) 771-3220 InvestorRelations@grahampackaging.com |
