Silgan Holdings (SLGN) Commences $250M Modified 'Dutch Auction' Tender; Approves Additional $300M Stock Buyback
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Silgan Holdings Inc. (Nasdaq: SLGN) announced that it has commenced a “modified Dutch auction” tender offer to purchase up to $250 million of its common stock. The tender offer begins today.
In addition, Silgan announced today that its Board of Directors has authorized Silgan to repurchase up to an additional $300 million of its common stock, effective through December 31, 2021. This new authorization, together with the remaining amount from a previous authorization, results in an aggregate outstanding authorization for stock repurchases of approximately $398.8 million, a portion of which will be utilized in the tender offer commenced today.
“We remain committed to driving shareholder value through a combination of acquisitions, organic investments and return of capital to shareholders,” commented Bob Lewis, Executive Vice President and CFO. “Given the stable cash flow generation of our business, our relatively low net debt leverage level and the continued low interest rate environment, we believe that it is appropriate at this time to return capital to shareholders in the form of a share repurchase. This return of capital will bring our net debt leverage toward the middle of our targeted range, while still allowing us to pursue other strategic initiatives,” concluded Mr. Lewis.
Under the terms of the tender offer, Silgan stockholders will have the opportunity to tender some or all of their shares at a price within a range of $45.50 to $52.25 per share. Based on the number of shares tendered and the prices specified by the tendering stockholders, Silgan will determine the lowest per share price within the range that will enable it to purchase $250 million in shares, or such lesser number of shares that are properly tendered. All shares accepted for payment will be purchased at the same price, regardless of whether a stockholder tendered such shares at a lower price within the range. The high end of the price range of $52.25 for the tender offer represents approximately a 9.3% premium to the closing price per share of $47.81 for Silgan’s common stock on October 14, 2016. At the maximum price of $52.25 per share, Silgan would purchase a maximum of 4,784,688 shares, which represents approximately 7.9% of Silgan’s currently outstanding common stock. At the minimum price of $45.50 per share, Silgan would purchase a maximum of 5,494,505 shares, which represents approximately 9.1% of Silgan’s currently outstanding common stock. Silgan expects to fund this repurchase from available cash on hand and revolving loan borrowings under its senior secured credit facility.
The tender offer will be subject to various terms and conditions as will be described in the offer materials that will be publicly filed and distributed to stockholders shortly. Additional copies of the offer materials will also be available from the Information Agent for the tender offer, Georgeson LLC. The Dealer Manager for the tender offer is Citigroup.
None of Silgan’s management, its Board of Directors and executive officers, the Information Agent, the Depositary or the Dealer Manager is making any recommendation to stockholders as to whether to tender or refrain from tendering their shares in the tender offer. Silgan’s directors and executive officers are entitled to participate in the tender offer on the same basis as all other stockholders, and certain of Silgan’s directors and executive officers may tender shares in the tender offer, subject to acceptance in the tender offer. Further, each of Messrs. R. Philip Silver and D. Greg Horrigan, Silgan’s co-founders and Non-Executive Co-Chairmen of the Board of Directors, has informed Silgan that he, and certain persons and entities that are record owners of shares of Silgan’s common stock that are deemed beneficially owned by him, currently intend to tender in the tender offer such number of shares of Silgan’s common stock with a goal that, assuming that Silgan purchases shares of its common stock in the tender offer for an aggregate purchase price of $250 million, would result in him maintaining approximately the same percentage beneficial ownership interest in Silgan’s common stock that he has immediately prior to the tender offer, subject to the effects of proration.
Stockholders must decide how many shares they will tender, if any, and the price within the stated range at which they will tender their shares. Stockholders should consult their financial and tax advisors in making this decision.
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