© Letica
RPC Group has agreed to acquire Letica Group, a US manufacturer of rigid plastic packaging and foodservice products, for up to $640 million.
The deal is RPC’s sixth since September, as it consolidates its position in Europe and creates new opportunities farther afield.
The British company will pay $490 million for the shares in Letica, with the option for an extra $150 million earn-out if Letica achieves pre-tax earnings greater than $140 million. The Michigan-based company makes a range of packaging for the food industry, including containers, hot and cold cups, and foodservice products.
RPC will raise around £552 million through a rights issue to help finance the deal.
RPC chief executive Pim Vervaat said: “The acquisition of Letica provides a unique opportunity to further extend RPC’s geographical reach into the attractive North American market through Letica’s strong and well-invested manufacturing footprint. We are excited to be able to develop an enhanced platform of scale to support continued organic and inorganic growth in the United States.
“Letica represents an excellent opportunity in the context of the group’s growth strategy to create a meaningful presence outside of Europe.”
Letica operates 13 manufacturing facilities in 11 US states, employing around 1,750 people. For the year to 30 June 2016, it generated revenue of $450 million and pre-tax earnings of $57 million.
Letica’s president and CEO, Anton Letica, will remain with the business until at least the end of its current financial year.
“I look forward to working with Anton and the management team to take Letica to the next stage of its strategic development,” Vervaat said.
RPC claimed that it would benefit from Letica’s position in a number of ‘growing end-markets’, including as a supplier to blue-chip American companies. For many of its customers, Letica is the primary supplier in its field, RPC said.
The acquisition also represents a strategic platform from which RPC Group can continue to seek growth and investment outside of Europe. Letica has a ‘culture of innovation and new product development’ with injection moulding expertise and more than 250 product configurations.
The enlarged group will have a meaningful presence in North America, with approximately 1.7 million square feet of manufacturing and warehousing space as well as an ‘integrated distribution network’ supporting impressive delivery and turnaround times.
The deal is expected to more than double RPC’s North American revenues and polymer purchases and contribute an ‘attractive financial profile’ to RPC’s business.
Since September, it has spent around £460 million on a series of acquisitions across the entirety of its supply chain.
In December, it acquired South African manufacturer Astrapak for £79 million and European waste storage company ESE World for €262.5 million.
The UK-based company expects its latest transaction to be completed by the end of March.
© FoodBev Media Ltd 2024