Apollo in €3.8bn bid for RPC acquisition

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Photo by RPC The offer has been hailed by RPC chairman Jamie Pike as a “good outcome”.

US-based private equity firm Apollo Global Management has agreed to buy UK packaging giant RPC Group for €3.32bn (€3.8bn).

Apollo has offered to pay shareholders £7.82 (€8.93) per share in cash, a premium of 25% from RPC’s closing price on 22 Jan, RPC said in a regulatory announcement 23 Jan.

The offer came after months of negotiations between the two companies and has been hailed by RPC chairman Jamie Pike as a “good outcome”.

"The board believes that the offer recognises the quality of RPC's businesses and the strength of their future prospects,” he said.

The move to sell the company came earlier last year, in response to what Pike described as 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," Pike said in an AGM trading statement in July last year.

Following the buyout offer, Pike said the agreement with Apollo was the “culmination” of the board’s efforts to resolve differing investor views.

“The board believes that the offer of £7.82 per share is a good outcome for shareholders and intends to recommend unanimously that they accept this offer," he added.

RPC, which has been on the acquisition trail in the past few years, saw its shares drop in March 2017, following a report by Northern Trust, which accused the company of disguising structural problems with many of the acquisitions it had made.

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.

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