(Reuters) -Packaging company Novolex will buy rival Pactiv Evergreen in a $6.7 billion deal, as the Apollo Global Management-owned company looks to bolster its food and beverage packaging business in a cautious economic environment.
Novolex will offer $18 per share to take Pactiv private in an all-cash transaction, including debt, the companies said Monday.
The deal represents a 32.4% premium to Pactiv's closing price on Dec. 2, a day before Bloomberg News first reported that Novolex was considering buying the company.
Shares of Pactiv, which sells its products to restaurants, retailers, food and beverage producers, packagers and processors, rose about 19%.
Packaging companies (NYSE ) have been seeking deals as declining demand following an e-commerce-driven boom during the pandemic prompted consolidation in the sector.
Last month, Switzerland-based Amcor agreed to buy U.S. peer Berry Global for $8.4 billion. International Paper said in April it would buy British paper and packaging company DS Smith.
Lower sales volumes in the food and beverage marketing segment even led to a decline in Pactiv's third-quarter revenue last month. The company also posted a loss during the period, hit by rising raw material costs.
The Novolex-Pactiv deal, backed by funds managed by affiliates of Apollo and the Canada Pension Plan Investment Board, would allow the combined company to offer 250 brands, along with expanded distribution, in the U.S., Canada and Mexico.
The combined company will be led by Novolex President and CEO Stan Bikulege.
Barclays (LON:) Bank, Morgan Stanley (NYSE and RBC Capital Markets are financial advisors to Novolex, while Goldman Sachs and Lazard (NYSE Freres are advisors to Pactiv.
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