With IPO, Berry Plastics Could End String of PE Ownership

Apollo Global Management may exit Berry Plastics after a more than five year hold.

Evansville, Ind.-based Berry Plastics has filed today to go public in a deal that could raise $500 million. Berry didn’t disclose how many shares it would sell or their price range. That will come in future filings.

Berry Plastics, which makes containers, lids and bottles, has a long history with private equity. In 1996, First Atlantic Capital acquired Berry for a reported $55 million. They sold Berry in 2002 to Goldman Sachs Capital Partners and JP Morgan Partners for $837.5 million. In 2006, Apollo and Graham Partners bought Berry Plastics in a $2.25 billion deal. It’s unclear how much Apollo or Graham invested in the deal. After the IPO, Apollo will continue to own a majority of Berry Plastics, according to the March 23 filing.

Berry is highly leveraged. The company had long-term debt of $4.5 billion as of Dec. 31 (total liabilities are about $5.5 billion). Berry’s sales, for the calendar year 2011, were $5 billion while net losses came to $247 million. Adjusted EBITDA was $758 million, the filing said.

Private equity firms usually own companies for five to seven years. Apollo has held Berry for more than five. “[Apollo is] at the end of their typical PE hold period,” one banker says. “An IPO [for Berry] makes sense since it’s a fairly large company.”

Berry Plastics is so big that it limits the universe of possible buyers, the person says. “It’s not surprisingly they’re going public,” the source says.

Private equity firms typically don’t immediately cash out with an IPO. Instead, they hold their stakes and use secondary sales to whittle down their investment.