Evansville-based Berry Plastics Group Inc., a manufacturer of consumer packaging, agreed to buy Avintiv Inc. for about $2.45 billion in cash to add a range of specialty materials used in diapers, filters and medical gowns.
Berry is acquiring Avintiv from private-equity funds managed by Blackstone Group LP, it said Friday in a statement. Blackstone, the world’s largest private equity firm, will reap about a 200-percent gain on its $286 million equity investment in Avintiv, a person with knowledge of the matter said.
CEO Jon Rich is expanding beyond plastic consumer packaging with an acquisition that, according to data compiled by Bloomberg, is Berry’s largest. It’s also the latest in a string of deals in the packaging industry following Rock-Tenn Co.’s purchase this month of MeadWestvaco Corp. for $9.7 billion, and Ball Corp.’s agreement to buy Rexam Plc for $6.7 billion.
Charlotte, North Carolina-based Avintiv gets 70 percent of sales from health and hygiene applications, with 56 percent of revenue coming from outside North America, Berry said in a presentation. The companies share nine of their top 10 customers.
“Avintiv would diversify Berry away from the tough food and beverage end markets,” Ghansham Panjabi, a Dallas-based analyst at Robert W. Baird & Co., said in a note. “The expansion is a positive move longer term.”
Berry fell 2.4 percent to $32.56 at the close in New York. Earlier it gained as much as 7.2 percent, the most since November 2013.
Berry plans to reduce costs by $50 million a year and expects to close the deal by year-end. Avintiv changed its name in June from PGI Specialty Materials Inc.
Avintiv has more than 4,500 employees at 23 sites in 14 countries. It supplies materials to companies such as Kimberly-Clark Corp., Procter & Gamble Co. and Cardinal Health Inc.
Avintiv, purchased by Blackstone in 2011 in a deal valued at $603.9 million, became the world’s largest maker of nonwoven fabrics through acquisitions, according to its website. It’s three times the size of its closest competitor in disposable nonwovens, used in surface cleaning and personal wipes.
Avintiv had sales of $2.1 million in the 12 months through March, generating earnings before interest, taxes, depreciation and amortization of $303 million. Berry’s sales were $5 billion during the same period.
Berry said it has obtained committed debt financing for the deal, and that it may also sell some equity, depending on market conditions.
Berry’s financial advisers on the deal were Credit Suisse Group AG and Barclays Plc, while Bryan Cave LLP was its legal adviser. Avintiv and Blackstone’s financial advisers were Citigroup Inc. and Bank of America Merrill Lynch and their legal adviser was Simpson Thatcher & Bartlett LLP.