photo by: Chad Lawhorn/Journal-World photo

Berry Global's plant at 2330 Packer Road in Lawrence is shown on Sept. 14, 2021.

Plastic cups are big business in Lawrence, and I don’t just mean the ones that get filled at certain college parties. Berry Global makes and ships tons of plastic cups at its two Douglas County facilities.

But now, a major investor of the company is saying Berry needs to make more money from its plastics business, or else it needs to sell the company to someone who will.

Berry was recently the subject of a short article in The Wall Street Journal that detailed how an activist investor who owns about 1% of publicly traded Berry Global is calling for the company to explore a sale.

Berry is one of the largest private employers in Douglas County, so it is probably wise to keep an eye on the situation. That doesn’t mean a sale, though, would mean bad things for Berry’s presence in Lawrence. The company operates two facilities here: a production facility in northern Lawrence and a warehouse/shipping facility along the Kansas Turnpike just northwest of the city limits.

Both facilities seem to be pretty important to Berry’s overall operations. In September, Berry officials announced they were investing $60 million in an equipment expansion at the Lawrence facility at 2330 Packer Road. The new equipment — used to make a more environmentally friendly type of plastic cup — would add 84 jobs to the company, bringing Berry’s local workforce to about 880 employees.

I haven’t heard anything that makes it seem likely that the sale talk would derail that Lawrence project. When company officials announced the expansion in September, they said work on the project would begin immediately, and it was expected to be completed by the second quarter of 2022.

However, Berry has been pretty quiet about the statements from activist investor Ancora Holdings. The company, which is publicly traded on the New York Stock Exchange, hasn’t put out any statements since The Wall Street Journal obtained a letter and published details of Ancora’s demands on Sunday evening. The trade journal Plastics News also was unsuccessful in getting a comment from Berry officials about the comments.

Cleveland-based Ancora is arguing that Berry’s share price has not produced adequate growth, especially during a time period when many stocks have seen significant increases in valuation. The company is calling for “real action to address the impediments to value creation that have compounded at Berry,” Plastics News reports.

It labeled the company a chronic under-performer when it comes to stock value, Plastics News reported.

“It is now necessary to initiate a comprehensive review of strategic alternatives, including a full sale or a go-private transaction,” Ancora’s letter said, according to Plastics News.

Ancora appears to be pressuring Berry to get more aggressive in buying back shares. Ancora’s letter came shortly after Berry announced it planned to buy back $50 million in shares during the first quarter of fiscal year 2022. Ancora responded by calling that plan an “insult to investors,” according to both The Wall Street Journal and Plastics News. Ancora wants the company to consider up to $1 billion in buybacks.

One point Ancora is arguing for could have some impact on Berry’s Lawrence operations. Ancora is asking the company to consider selling its real estate — which conceivably could mean some of its assets in Lawrence — and then leasing back the property. Ancora estimates that would free up about $2 billion in Berry’s balance sheet.

Ancora thinks that Berry’s stock should be worth about $100 per share, and improving some balance-sheet issues would help it get there. Over the last year, Berry Global’s shares have traded in a range of $48.65 to $71.98 per share, with recent prices running near $70 per share.

Absent a sale, which can come with uncertainty — especially if a competitor purchases the company — the biggest potential impact to Lawrence might be that share price issue. Presumably, there are Lawrence employees who own Berry stock, and a $30-per-share increase could be a real boon. Alternatively, if Ancora is wrong and Berry spends its money on share buybacks and other such tactics and doesn’t see a bump in its share price, that leaves less money for Berry to invest in capital projects, like the $60 million expansion underway in Lawrence. Berry leaders previously have said they think investing Berry’s cash flow in growth projects is critical to the company’s future success.

Who is right? Don’t know. The best any of us can do right now is fill up another cup and watch it unfold.