Leading UK plastics packaging firm RPC Group Plc is in preliminary discussions with two US-based private equity firms Apollo Global Management and Bain Capital over two possible buyout offers.
In a brief announcement on 10 Sept, the Rushden, Northamptonshire-headquartered packaging major said the two investment firms had until 5:00pm on 8 October to make the buyout offer but did not disclose further financial details.
The RPC statement came in response to a Bloomberg report on 8 Sept, saying the leading European packaging firm was in talks with potential buyers. The report valued the company at £2.8bn (€3.1bn), noting a 20% decline in RPC’s shares over this year.
In an 18-July AGM trading statement, RPC chairman Jamie Pike confirmed that the company had been under pressure by investors.
"Pressure on the company’s market valuation and differing investor views on the appropriate level of leverage is constraining the group’s ability to pursue some attractive opportunities for growth and your board is working to resolve this," he noted.
"In the short-term, the group will prioritise cash generation and the announced disposal of our non-core businesses, with a view to generating increased capital for deployment in the business or further returns to shareholders,” Pike added.
PNE has learnt that following the announcement by Pike, RPC was approached by the two private equity firms with the buyout offer.
Following the official announcement of talks, RPC shares rose 25% to as high as 857p on the London Stock Exchange in early Monday (10 Sept) trading but settle later at 828p, 21% higher than the 685p close on 7 Sept.
RPC, which has been on an acquisition trail in the past few years, saw its shares dropping last March following a report by Norther Trust, which accused the company of disguising structural problems with a lot of acquisitions.
An FT article on 22 March 2017, quoted Northern Trust analyst Paul Moran as saying that RPC management had been encouraged to pursue value-destructive acquisitions by “innovative” bonus schemes and “some of the most aggressive accounting we have seen”.
"He argued that RPC’s definitions of adjusted profit and free cash flow had been inconsistent over the past five years, and had flattered the figures in ways that sometimes 'defy accounting logic'," the FT report added.
RPC reported a 36.4% year-on-year increase in sales at £3.74bn for the full year 2017, with adjusted profit before tax up 36.1% at £389m.
The proposed takeover follows another major consolidation deal in the market, Amcor Ltd’s $6.8bn (€5.88bn) takeover of US flexible packaging giant Bemis Co Inc.
Melbourne, Australia-based Amcor announced 7 Aug that it was acquiring Neenah, Wisconsin-based Bemis in a bid to expand its global flexible packaging presence.