Blog Coverage Berry Plastics Widens its Footprint in North America with Acquisition of AEP Industries

LONDON, UK / ACCESSWIRE / August 26, 2016 / Active Wall St. blog coverage looks at the headline from Berry Plastics Group, Inc. (NYSE: BERY) as the company announced on August 25, 2016, that it has entered into an all cash and stock agreement to acquire AEP Industries Inc. (NASDAQ: AEPI). The transaction is valued at $ 765 million including debt. The deal is expected to close by December 2016. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Evansville, Indiana based Berry Plastics Group (Berry Plastics) is a manufacturer of plastic consumer packaging and engineered materials. Its products range from specialty closures, prescription vials, specialty films, adhesives, corrosion protection materials, to drink cups, thin-wall containers and bottles. Montvale, New Jersey based AEP Industries (AEP) is a leading manufacturer of flexible plastic packaging films which are used for consumer, industrial, and agricultural applications. For FY 2015 AEP’s sales were $1.1 billion with net income of $39 million.

Highlights of the transaction

Berry Plastics has put forth two options to AEP shareholders, for each AEP share they hold they can either get $110 in cash or 2.5011 Berry Plastics’ common stocks. If the stockholders agree to take Berry Plastics’ common stocks then once the deal is through AEP shareholders shall own approximately 5% of Berry Plastics’ shares.

Commenting on the deal J. Brendan Barba, AEP’s Chairman and CEO said:

“We believe Berry is the right partner to expand our product portfolio to deliver high quality packaging films to even more customers around the world. Berry shares our commitment to teamwork and success, and we are confident our valued employees will benefit from the opportunities that come from being part of a larger company.”

Jon Rich, Chairman and CEO of Berry Plastics stated on his side:

“AEP, together with Berry’s Engineered Materials Division, creates an impressive packaging film producer serving the North American market. This unique combination offers the opportunity for significant value creation for Berry and AEP shareholders alike, as we realize procurement and operating cost savings across the two organizations.”

Strategic Moves for Berry Plastics

AEP products complement and strengthen Berry Plastics portfolio and business model. Berry Plastics would be able to increase its market penetration in North America. Consumers will benefit with the comprehensive range of products. The two companies together can optimize their production capacities which would lead to attractive cost savings in terms of materials and conversion costs. Berry Plastics expects that cost savings would be as high as $50 million annually due to the joint synergies of both companies.

Berry has been aggressively expanding its business through strategic acquisitions. In October 2015, Berry Plastics had acquired Avintiv Inc., which manufactures products ranging from diapers to disinfectants, for $2.45 billion from Blackstone Group L.P. In May 2016, Berry Plastics announced that the savings from the acquisition are expected to reach $80 million, up from an earlier estimate of $50 million and the figure could be even higher by the end of the year.

Impact on Berry Plastics’ and AEP Shares

The news of AEP acquisition buoyed up the share price of Berry Plastics as the stock traded up 4.88%, to finish the session at $ 45.39 on August 25, 2016. A total volume of 5.16 million shares changed hands, which was higher than its three month average volume of 1.43 million shares. Berry Plastics shares have surged 55.39% in the past 12 months and are up 25.46% since the start of the year.

AEP stocks soared 44.29 % to close at $ 111.06 at the closing hour on August 25, 2016, which was close to its acquisition price. A total of 675,102 shares were traded, which was higher than the 3 months average volume of 52,670 shares. AEP shares have more than doubled in the last twelve months, gaining 106.55% during the time frame.

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