(Reuters) - The maker of the red Solo cup, a plastic tumbler that for years has been a mainstay of American parties and picnics and more recently the subject of a hit country music single by Toby Keith, is exploring a sale.
Solo Cup Company, controlled by private equity firm Vestar Capital Partners, is considering a sale after interviewing banks several months ago, sources familiar with the situation said. Goldman Sachs (GS.N) has been hired to advise on the process, one of the sources said.
The company, founded 75 years ago in Chicago, has about $1.6 billion in annual sales.
Solo makes several types of disposable paper and plastic utensils, including the Traveler hot cup lids and Guildware cutlery.
But its red party cups have become ubiquitous at college parties over the years as the tumbler of choice for beer and other beverages, and drinking games such as flip cup.
More recently, the cup became the subject of a new song by country music star Toby Keith, with the single “Red Solo Cup” getting more than 2.5 million views on YouTube.
“Red solo cup, I fill you up,” the song goes. “Let’s have a party, let’s have a party.”
It’s not all a party for the Solo Cup Company.
Based in Lake Forest, Illinois, the company has been grappling with rising costs of raw materials such as resin and paper, and struggling to pass that on to customers.
The company was started by the Hulseman family in 1936 and remained family owned for decades. It sold a minority stake to Vestar in 2004, and then ceded control of the board to the private equity firm. Vestar owns a 33 percent stake.
Representatives for Vestar Capital and Goldman Sachs declined to comment.
One of the sources said logical buyers for the company could include paper and packaging firms such as Georgia-Pacific KCHINP.UL and Pactiv Corp.
Vestar, meanwhile, is shutting down its operations in Europe because of fewer investment opportunities.
Vestar said earlier this week it will focus on North America and continue to add staff in the United States.
Reporting by Soyoung Kim and Michael Erman; Editing by Paritosh Bansal and Robert MacMillan