:. Food Industry News


Graham Packaging Plans New Plants

Source: Reuters
08/08/2008

New York, Aug 7 - Graham Packaging, which is being taken public by Hicks Acquisition Co Inc and the Blackstone Group LP, is looking to set up new facilities in different regions, Chief Executive Warren Knowlton told Reuters on Thursday

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The company, which makes plastic containers and had net sales of about $2.5 billion in 2007, plans to double the number of facilities it operates in South America over the next two to three years, while making a foray into Asian markets though a joint venture.

"What we would like to do is take a strategic stake in one or more businesses in China or India over the next year," he said in a telephone interview.

Knowlton said Graham Packaging, whose containers are used in the food, beverage, household, personal care and automotive lubricant industries, will add 4 new manufacturing facilities in various regions in the coming year itself.

In June, Hicks Acquisition Co, a special purpose acquisition company, agreed to partner with private equity firm Blackstone Group to take Graham Packaging public in a deal valued at about $3.2 billion.

A special purpose acquisition company (SPAC) is a shell organization that raises money in an initial public offering to acquire another business. That business then becomes publicly traded through the SPAC's shell company after shareholders approve the deal.

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Under the terms of the deal, the combined enterprise will be named Graham Packaging Co and will be listed on the New York Stock Exchange. Blackstone will maintain the single largest ownership stake for at least two years.

The deal is expected to close toward the end of the year, following approvals from the U.S. Securities and Exchange Commission and shareholders of Hicks Acquisition Co.

Graham Packaging earlier on Thursday announced second-quarter net income of $28.3 million, up from $5.1 million a year earlier.

Knowlton said the increased profits were driven in part by cost-control strategies.

Economic woes in both North America and Western Europe have hurt demand in certain end-markets like single serve juices and sports drinks, he said.

"Our emphasis is Europe is not to put more infrastructure in the West," said Knowlton. "It's going to be looking at on-site locations next to our customers' plants in Eastern Europe,"

The company operates about 87 plants worldwide with the majority of them located in North America and the remainder spread across Europe and South America.



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