Evansville-based Berry Global Group Inc. (NYSE: BERY) is responding to a letter from Ancora Holdings Group LLC. The Cleveland-based company, which owns 1% of Berry’s outstanding shares, says Berry’s board of directors should begin a comprehensive review of “strategic alternatives,” including a possible sale, following what it claims are “several years of share price underperformance.”
In its letter, Ancora says Berry’s announcement last week of plans to repurchase $50 million in outstanding common stock is “an insult to investors,” adding the amount is “wholly insufficient” and Berry’s board did not increase its existing authorization.
“Shareholders have historically suffered as the Company, which was previously saddled with immense debt, pursued deals with excessively high leverage ratios, causing its shares to trade at an acute discount,” Ancora said. “But even now that the Company’s leverage ratio is within its target range, its shares still continue to underperform the market.”
Ancora says it has spoken to other shareholders who also believe “they may be best served by seeing the Company sold to one of the many well-capitalized financial sponsors and strategic buyers in the marketplace.”
Other alternatives identified by Ancora include the Berry board expanding its repurchase authorization to $1 billion. The company also suggests funding share repurchases through a sale-leaseback transaction.
You can view Ancora’s full letter by clicking here.
In response, Berry said while it is not in its policy to comment on interactions with specific shareholders, members of Berry’s management team have held several discussions with Ancora representatives over the past year.
“We have continued to focus on driving consistent and sustainable long-term growth through strategic portfolio management and a flexible capital allocation strategy while also working diligently to offset the challenges created by COVID, inflation, labor and supply chains. We have successfully achieved our targets over the past several years and expect to drive our third consecutive year of positive organic growth in fiscal 2022.
We continue to build and maintain our world-class, low-cost, manufacturing base, with an emphasis on investment in key growth markets and regions. Our robust, stable and dependable cash flow enables us to return capital to shareholders at favorable terms, while continuing to execute a flexible capital allocation strategy focused on additional opportunistic share repurchases, the paydown of debt and strategic acquisitions or value-enhancing strategic investments.
The Berry Board and management team remain committed to constructive engagement with all shareholders and are always open-minded to ideas that may enhance shareholder value.”