23rd Jan 2019 10:15
LONDON (Alliance News) - RPC Group PLC on Wednesday said it has received and agreed to a cash takeover offer from funds managed by Apollo Management IX LP, valuing the FTSE 250 plastic packaging company at GBP3.32 billion.
The two companies have been holding talks regarding the acquisition since September, with the 'put up or shut up' deadline pushed back no fewer than five times.
It was first set for October 8 and and then extended to November 5, December 3, December 21, January 18 and January 23.
Under the terms of the acquisition, RPC shareholders will receive 782.00 pence in cash per share. They also will be entitled to the previously declared 8.1p dividend, set to be paid on Friday.
The offer price, together with the dividend, represents a 16% premium to RPC's closing price on September 7, the date before the first approach for the company's takeover was made.
RPC shares were trading up 4.6% at 768.00 pence each on Wednesday morning.
"It's taken months to get to this stage, and the final offer price is some way behind what analysts had suggested was possible. It's not impossible for a rival bidder to emerge, but plastic packaging is far from popular at the moment and with the global economy looking rocky, it might be asking a bit much to expect a rival to fork out the best part of GBP4 billion to keep RPC out of private equity hands," Nicholas Hyett, equity analyst at Hargreaves Lansdown, said.
He added: "It's potentially disappointing for investors – a 16% premium is hardly over-generous, and the shares have traded higher in the last 12 months. But with board backing and minimal regulatory concerns, we'd expect the deal to go through."
RPC directors unanimously recommended shareholders to accept the terms of the offer which they consider to be "fair and reasonable".
Chair Jamie Pike said: "The board believes that the offer recognises the quality of RPC's businesses and the strength of their future prospects. The board believes that the offer of GBP7.82 per share is a good outcome for shareholders and intends to recommend unanimously that they accept this offer."
Back in July, at the company's annual general meeting, Pike said the firm was constrained from pursuing attractive opportunities for growth due to "pressure" on its market valuation and "differing investor views on the appropriate level of leverage".
On Wednesday, Pike said: "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."
Apollo was not the only company interested in acquiring RPC. Back in September, RPC said it also was holding talks with US private equity firm Bain Capital. However, at the beginning of December Bain pulled out of the takeover talks by "mutual agreement" with RPC.
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