Graeme Hart mulls US$5b sale

Last updated 07:39 11/06/2014
Graeme Hart
Fairfax NZ
POTENTIAL SALE: Graeme Hart is said to be mulling selling drink carton firm SIG.

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The country's richest man, Graeme Hart, is exploring a sale of SIG Combibloc Group that could value the world's second largest maker of drink cartons at around US$5 billion (NZ$5.8b), according to people familiar with the matter.

Hart's packaging conglomerate, Reynolds Group, has hired Goldman Sachs to explore alternatives for SIG, including a potential sale, the people said.

SIG, which Hart acquired for US$2.3 billion in 2007, is in the early stages of preparing a sale process and is expected to attract interest mainly from private equity firms, they added.

SIG has annual operating earnings of about US$500 million and may fetch close to 10 times that amount in a potential deal, the people said, asking not to be identified because the deliberations are private.

Representatives for Reynolds and SIG did not immediately respond to requests for comment. Goldman Sachs declined to comment.

A sale of SIG, which is based in Neuhausen am Rheinfall, Switzerland, would underscore Hart's efforts to trim the US$18b debt pile his packaging empire has accumulated through leveraged buyouts.

Those deals include the US$6b acquisition of Pactiv, the maker of Hefty trash bags, in 2010, and the US$4.5b takeover of plastic container producer Graham Packaging in 2011.

SIG manufactures aseptic carton packaging that allows juices, milk, soups and sauces to be stored for a long period of time without refrigeration. The company has around 5,100 employees in 40 countries.

SIG ranks second in global food and drink carton packaging sales, behind Sweden's Tetra Laval international SA.

The company has been grappling with lower sales and higher manufacturing and raw material costs, particularly for resin, according to a presentation on the Reynolds Group website.

Hart, 59, has a net worth of US$7b, according to Forbes. The National Business Review rich list valued him at NZ$6.4b last year.

In April, Hart sold part of his Carter Holt Harvey empire to a Japanese government-backed joint venture.

Japanese paper manufacturer Oji Holdings and Japanese government-backed investment fund Innovation Network Corporation of Japan bought the pulp, paper and packaging business for $1.037 billion. The business included the Kinleith pulp and paper mill, Tasman pulp mill, Penrose paper mill, and the CHH Group packaging businesses in Australia and New Zealand.

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- Reuters (additional reporting Stuff)

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