Investopedia: Silgan Sees A Good Deal Crumple

Investors had many good reasons to be enthusiastic about Silgan's (Nasdaq:SLGN) announced merger with Graham Packaging (NYSE:GRM). Not only was the company in place to benefit from significant operating synergies and tax benefits, Graham would have given the company an invaluable plastics packaging business - an increasingly important consideration in a world that seems to be moving away from Silgan's traditional metal packaging. 


Unfortunately, Silgan was not the only company to see value in Graham's assets. New Zealand-based Reynolds Group Holdings came in near the eleventh hour and made a counter-offer that Graham's board could not refuse.

The New Deal
Graham informed Silgan and the market that another bidder had emerged and offered $25 in cash for each share of Graham Packaging. That was a significant improvement over the deal Silgan offered - a deal that had been worth about $19.56 at the time of the agreement, but one that incorporated a significant Silgan equity component (meaning that the actual deal value changed every day with Silgan's share price). On a fair like-for-like basis and considering Silgan's share price, Reynolds' offer was ultimately about 14% better and had the added benefit of being an all-cash deal. 



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