Reynolds Consumer Products pursues sale, sources say

17 September 2019

Reynolds Group is exploring a sale of Reynolds Consumer Products via Credit Suisse, said three sources familiar with the matter.

The business, known for its aluminum foil and Hefty waste bags, generated USD 650m in EBITDA last year, according to Reynolds filings. It may be able to fetch 11x to 12x this figure if a deal is reached, suggesting the unit could be valued at more than USD 7.2bn, two of the sources said.

After conducting gold card meetings with suitors recently, the company sent out books last week to kick off a formalized process, the sources added.

Earlier this month, Lake Forest, Illinois-based Reynolds Consumer Products announced it had confidentially filed with the SEC for a potential IPO filing. 

New Zealand-based Reynolds Group is owned by billionaire Graeme Hart.

Financial sponsors are the primary suitors for Reynolds Consumer Products, the three sources said. However, Georgia Pacific, owned by Koch Industries, could also be a logical strategic suitor, one of the sources and a sector advisor said.

The ultimate valuation for Reynolds Consumer Products may depend on buyers’ views on the “plastics components” of the business, some of the sources said. The business had USD 3.1bn in revenue for 2018, split between waste, cooking and tableware.

Reynolds Consumer Products markets products under the Reynolds and Hefty brands and provides preparation, cooking, cleanup, and storage solutions, according to the website. The Hefty brand is associated waste bags, slider bags, plates, and cups. Reynolds branded products include aluminum foil, parchment paper, plastic wrap, oven bags, and slow cooker liners.

Reynolds Group’s other segments include Pactiv Foodservice, Graham Packaging, Evergreen and a closure business that makes beverage caps. This news service reported earlier this year that the company was exploring a sale of the closure unit, which could fetch more than USD 1bn.
Credit Suisse and Reynolds Consumer Products declined to comment.

By Bhavna Kaul in New York.