Graham Packaging signs definitive merger agreement with Reynolds

Graham Packaging, one of the leading suppliers of plastic containers in the US, announced on June 17 the signing of a definitive merger agreement, and an amendment thereto, under which Graham Packaging will be acquired by Reynolds Group Holdings Limited in an all-cash transaction for US$25.50 per share, or a total of approximately US$4.5 billion including assumed indebtedness.

Under the terms of the merger agreement with Reynolds, as amended, each outstanding share of Graham Packaging common stock will be converted into the right to receive US$25.50 in cash, subject to the terms of the merger agreement. No approval by Reynolds stockholders is required.

At the closing of the merger, the surviving corporation will be making an aggregate cash payment of US$245 million pursuant to contractual change in control provisions in the company's income tax receivable agreements with Blackstone Capital Partners III L.P. and the Graham family. These agreements were entered into prior to Graham Packaging's February 2010 IPO, and reference is made to the company's prior public filings for further information concerning such agreements.

The merger agreement was unanimously recommended by a special committee of the Graham Packaging Board of Directors and was then unanimously approved by Graham Packaging's full Board of Directors. Under the terms of the amendment to the merger agreement, the merger consideration was increased from US$25.00 to US$25.50 in cash per share of Graham Packaging common stock, in consideration of a material shortening of the deadline for delivery of Blackstone's written consent approving the merger.

When the merger is completed, Graham Packaging Company L.P., which is the issuer of various series of notes, will merge with and into the surviving corporation in the merger, which corporation will succeed to such issuer's obligations under such indebtedness.

Graham Packaging also announced on the same day that it has terminated the previously announced merger agreement with Silgan Holdings Inc. following the notice provided to Silgan on June 13, 2011 of its Board of Directors' determination and intent to change its recommendation with respect to the transaction with Silgan and to terminate that agreement to enter into a binding agreement with Reynolds upon the expiration of a three business day match-right period.

Graham Packaging's Board of Directors has determined, upon the recommendation of its special committee and after consultation with its financial advisor and outside legal counsel, that the transaction with Reynolds constitutes a superior proposal as compared to the transaction with Silgan even after taking into account certain adjustments to the terms thereof proposed by Silgan during the match-right period. As a consequence, Graham Packaging's Board of Directors has withdrawn its recommendation with respect to the merger agreement with Silgan. Graham Packaging is paying Silgan a $39.5 million termination fee in accordance with the terms of that agreement.