Pactiv investor sues Hefty Bag maker over takeover

Reynolds Group Holding Ltd.'s takeover of Pactiv Corp., the maker of Hefty bags, was challenged in a lawsuit by a trade union pension plan calling the deal "fundamentally unfair" to Pactiv shareholders.

Pactiv, Chairman Richard Wambold, seven board members, Rank Group Investments Ltd. and its Reynolds Group unit were sued Tuesday in Illinois state court in Chicago by a plumbers and pipe-fitters union plan.

The $4.5 billion transaction was announced by Pactiv on Aug. 17. The per-share price of $33.25 represents a 39 percent premium over its $23.97 May 14 closing price before the disclosure of negotiations. The acquiring Rank Group unit, manufacturer of Reynolds Wrap foil, is also taking on about $1.5 billion in debt.

Pactiv had "excellent prospects for future growth," according to the complaint, which called the agreed price unfair. The union plan said company directors breached their fiduciary duty to shareholders by undervaluing the company.

The pension fund seeks an order blocking the transaction until Pactiv's directors obtain the best possible price for shareholders. They also want the court to certify the injured shareholders as a group for purposes of the lawsuit.

The company has more than 132 million outstanding shares, according to the complaint.

Matthew Gonring, a spokesman for Lake Forest-based Pactiv, declined to comment.

Petra Beck, a Winterthur, Switzerland-based spokeswoman for Reynolds couldn't immediately be reached for comment. The company's media relations department didn't immediately reply to an e-mailed request for comment.

Reynolds Group is controlled by Rank Group, which is owned by Graeme Hart, the wealthiest person in Australia and New Zealand. Acquiring Pactiv would be the most expensive deal yet for the 55-year-old Hart, who built his fortune buying grocery, dairy and retail assets through closely held Rank Group.

The case is Local Union 373 U.A. Welfare Pension & Annuity Funds v. Wambold, 10CH36437, Cook County, Illinois, Circuit Court, Chancery Division (Chicago).