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Linpac owners mull sell-off options

By Rory Harrington , 09-Mar-2010
Last updated on 09-Mar-2010 at 13:22 GMT

Owners of UK packaging giant Linpac have launched a strategy review that could see the company broken up and sold off.

But a source with knowledge of the matter told FoodProductionDaily.com that the new owners are exploring all options and that no decision has yet been reached. It is believed that nothing is likely to happen before the end of the year at the earliest.

The news comes after Linpac, Europe’s largest food packaging group, was last year bought up by its lenders, including Deutsche Bank and Lloyds Banking Group. The private equity owners have commissioned Bank of America Merrill Lynch to evaluate strategic options for the firm – one of which may be the splitting and selling off of its four segments. The consultants have been given a brief to “determine the most appropriate value realisation strategy”, a Linpac spokesman said.

“Importantly, the mandate given to Bank of America Merrill Lynch emphasises that the clear objective is value maximisation not urgency and no formal sale process is currently underway”, added the spokesman.

The company stressed “it is and has been business as usual” – an echo of the announcement it made at the end of January as its new owners were formally unveiled. At that time, Linpac said its debt had been halved to just over £300m and that the banking syndicate was pumping £65m into the group.

Conversation just beginning

Yesterday, the company reaffirmed this outlook, saying: “The shareholders have invested additional cash in the business, which demonstrates their belief in its inherent strength, and the business is now capitalised in such a way that the management team has sufficient financial headroom and time, therefore, to maximise value.”

Birmingham-based Linpac employs 7,500 employees and boasts yearly revenues of around £1.1bn. Its four divisions are the main food packaging business, the Allibert returnable transit packaging unit, the Viscount business in Asia-Pacific and Ropak in North America.

It is understood that interest has already been shown in buying both individual divisions and the whole company. But the source said: “The conversation is only beginning and nothing will happen in the short-term.”