Court Blocks Owens-Illinois Merger With Florida Firm at FTC’s Request
A federal judge issued a temporary restraining order Wednesday that blocks a proposed merger of Owens-Illinois Inc. and a Florida-based glass company for up to six weeks.
U.S. District Judge Joyce Green granted a request by the Federal Trade Commission for the order after it had been agreed to by attorneys for Toledo, Ohio-based O-I.
In a complaint filed earlier in the day with the court, the FTC had sought a temporary restraining order and preliminary injunction to prevent O-I and a subsidiary, BI Acquisition, from completing the proposed merger with Brockway Inc. of Jacksonville, Fla. The agency had argued that such a union might violate federal antitrust laws.
Green set a Jan. 25 hearing date for arguments on whether a preliminary injunction should be issued. An injunction would block the proposed merger indefinitely and allow the FTC to make an administrative ruling on the acquisition.
The judge also agreed to allow Brockway to join O-I as a defendant in the court proceedings.
Brockway ‘Eliminated’
In its complaint, the FTC said it has reason to believe that the acquisition would violate the Clayton Act and the Federal Trade Commission Act “because it may substantially lessen competition in the manufacture and sale of glass containers in the United States.”
The commission said the merger could eliminate competition between O-I and Brockway, increase concentration in the market and eliminate Brockway as a substantial independent competitive force in the industry.
“The re-establishment of Brockway Inc. as an independent, viable entity after it were to become a part of Owens-Illinois Inc. or BI Acquisition would be extremely difficult, and there is a substantial likelihood that it would be impossible to restore the business as it originally existed,” the FTC said.
Owens-Illinois is the nation’s largest maker of glass containers; Brockway is the nation’s third-largest.
O-I spokesman Sam Allen said the company was not surprised by the FTC’s action.
“We expected the FTC to file the suit, and we intend to vigorously contest it,” he said from the company’s headquarters.
After four months of negotiations, O-I broke off talks with the FTC on Monday, saying it would proceed with its plan to acquire Brockway.
“We felt that we needed to get it resolved, and we were not going to get it resolved with the FTC staff,” Allen said. “Since we weren’t going to be able to reach a mutually satisfactory agreement there, we felt this was the next logical step.”
O-I had been talking to the FTC about the $60-a-share acquisition since October. The company launched its tender offer Sept. 23; on Nov. 18, the commission voted 3-2 to block the deal. The transaction would have increased O-I’s share of the industry to 40% from 26%.
In an attempt to compromise with the commission, O-I agreed to sell parts of Brockway, including three manufacturing facilities, for $68 million. But late last month, the FTC’s staff indicated that it would reject that plan as well, Allen said.
O-I has been offered about 11 million of the 12.4 million outstanding shares of Brockway, he said.
O-I was taken private last year in a $3.66-billion leveraged buyout led by the New York investment firm of Kohlberg Kravis Roberts & Co.
