Packaging company RPC Group will be sold to private equity firm Apollo Global Management for £3.32 billion.
RPC’s shareholders will receive £7.82 per share as well as an interim dividend of £0.081 per share as part of the recommended offer. The price represents a premium of 15.6% on the closing price on 7 September, a few days before the group first announced it was in takeover talks, or 7.6% on yesterday’s closing price.
But some analysts have suggested the sale price falls short of “what analysts had suggested was possible”.
The deal is the largest in the packaging sector since Amcor agreed to acquire Bemis last year.
Jamie Pike, chairman of RPC, said: “The board believes that the offer recognises the quality of RPC’s businesses and the strength of their future prospects. In July, I stated that differing investor views on the appropriate level of gearing was constraining the group’s ability to pursue opportunities for growth and, as such, putting pressure on RPC’s valuation. I also said that the board was working to resolve this situation. Today’s announcement is the culmination of that process. 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.”
Last year, RPC saw revenue grow by 7% to reach £1.89 billion while operating profit increased by 3% to £214.3 million.
This is in spite of mounting pressure on the plastic packaging industry as consumer concerns around post-consumer plastic waste intensify. A total of 250 organisations – including food manufacturers and sustainability groups – signed a pledge in October to address rising levels of plastic waste, while food companies including Unilever, Arla and PepsiCo joined a similar pact earlier in 2018 to scrap unnecessary single-use plastics.
The sector is likely to come under further pressure with both the UK and European Union (EU) introducing new taxes – or outright bans – on single-use plastics.
Much of RPC’s food packaging portfolio is plastic-based, including its coffee cups and plastic tubs for retail products.
Against this backdrop, it would be “a bit much to expect” for another company to outbid Apollo’s £3.3 billion offer, said Nicholas Hyett, an analyst for Hargreaves Lansdown.
RPC Group has also signed a three-deal deal with Norwegian dairy company Tine to supply a range of packaging such as containers, pots and bottles.
© FoodBev Media Ltd 2020