Exhibit 99.1
Pactiv To Sell Protective and Flexible
Packaging Businesses
LAKE FOREST, Ill.--(BUSINESS WIRE)--June 23, 2005--Pactiv
Corporation (NYSE:PTV) today announced an agreement to sell
substantially all of its North American and European protective and
flexible packaging businesses to an affiliate of AEA Investors LLC, an
international private equity firm, for approximately $530 million and
the assumption of certain liabilities, or 6.8 times 2004 EBITDA.
Product lines in these businesses include air cushioning, air padded
mailers, foam, Hexacomb(R) kraft honeycomb, flexible packaging, and
hospital supplies. In 2004 these businesses had sales of $838 million
and operating income of $60 million excluding restructuring and other
charges. The Company is retaining its European molded fiber business
and Asian operations, which had been part of the Protective and
Flexible segment. In 2004 these retained businesses had sales of $120
million and operating income of $15 million excluding restructuring
and other charges.
"The sale of these businesses represents an important step in
Pactiv's strategy to grow its higher return consumer, foodservice, and
food packaging businesses. We believe Pactiv will be a stronger, more
focused company with increased financial flexibility and better growth
prospects as a result of this divestiture," said Richard L. Wambold,
chairman and chief executive officer of Pactiv Corporation.
Because of management initiatives on productivity, service, and
product quality over the past few years, the divested businesses have
seen improving sales and margins and are well positioned for growth as
an independent company. "This is an exciting opportunity for our
customers, employees, and new investors," said James D. Morris,
Pactiv's senior vice president and general manager, Protective and
Flexible Packaging, who will become chief executive officer of the new
venture at closing. "With a shared strategic vision and a desire for
continued sales and earnings growth, AEA is dedicated to continue to
build on the strong market positions of these businesses," Morris
concluded.
The transaction is expected to close in the third quarter and is
subject to normal regulatory approvals and customary conditions to
closing. Proceeds of the transaction will be used for acquisitions,
share repurchase, and other corporate purposes.
This press release includes certain "forward-looking statements"
such as "...will be a stronger, more focused company...", "is expected
to close in the third quarter", "proceeds will be used for
acquisitions, share repurchase, and other corporate purposes". These
statements are based on management's current reasonable and good faith
expectations. A variety of factors may cause actual results to differ
materially from these expectations including a slowdown in economic
growth, changes in the competitive market, increased cost of raw
materials, and changes in the regulatory environment. More detailed
information about these and other factors is contained in the
Company's Annual Report on Form 10-K at page 56 filed with the
Securities and Exchange Commission as revised and updated by Forms
10-Q and 8-K as filed with the Commission.
AEA is one of the most experienced international private equity
investment firms with investors that include former and current CEOs
of major multinational corporations, family groups, endowment funds
and institutions from around the world. With offices in New York and
London, AEA focuses on investing in companies in the industrial
products and services, speciality chemicals, and consumer products
sectors. For more information about AEA, visit the company's website
at www.aeainvestors.com.
Pactiv Corporation is a leading producer of specialty packaging
products for the consumer, foodservice/food packaging and
protective/flexible packaging markets. With sales of $3.4 billion,
Pactiv has one of the broadest product lines in the specialty
packaging industry, and derives more than 80 percent of its sales from
market sectors in which it holds the No. 1 or No. 2 market-share
position. For more information about Pactiv, log on to the company's
website at www.pactiv.com
Pactiv Corporation
Protective & Flexible Packaging
Regulation G GAAP Reconciliation
Operating Income
Dollars in millions
Year ended December 31, 2004
-------------------------------------
Divested Retained Total
businesses businesses
-------------------------------------
Sales $838 $120 $958
============ ========== ======
Operating income before restructuring
and other (a) $60 $15 $75
Restructuring & other 14 41 55
------------ ---------- ------
Operating income $46 ($26) $20
============ ========== ======
(a) The company's management believes that focusing on operating
income excluding the effect of restructuring and other charges is
a meaningful alternative way of evaluating the company's operating
results. The restructuring and other charges relate to actions
that will have an ongoing effect on the company, and to consider
such charges as being only applicable to 2004 could make the
company's operating performance in that period more difficult to
evaluate, particularly when compared with other periods in which
there were no such charges. The company's management uses
operating income excluding restructuring and other charges to
evaluate operating performance, and, along with other factors, in
determining management compensation.
CONTACT: Pactiv Corporation
Christine Hanneman (Investor Relations), 847-482-2429
channeman@pactiv.com
or
Lisa Foss (Media Relations), 847-482-2704
lfoss@pactiv.com