18th Dec 2015 17:54
LONDON (Alliance News) - RPC Group PLC late Friday said the Works Council has approved its proposed acquisition of Global Closure Systems.
RPC Group has now entered into definitive transaction documentation, which is conditional on Global Closure System shareholders approving the deal and the pair getting clearance from authorities.
The approval from the Works Council follows on from a short consultation period with the two companies that was required under French law after the trio signed a put option agreement.
RPC, which supplies rigid plastics packaging products and plastic containers, plans to acquire the plastic closures and dispensing systems specialist for an enterprise value of EUR650.0 million, equivalent to about GBP470.0 million, on a cash-free, debt-free basis.
That values France's GCS at 6.8 times its earnings before interest, tax, depreciation and amortisation in the 12 months ended September 30. On completion of the deal, RPC will pay EUR186.0 million to the sellers of GCS.
RPC Group will now await for GCS shareholders decision and submit forms in order to gain clearance from the EU and US. The company highlighted it will not need clearance from individual countries within the EU.
"In the opinion of the directors, this will not have any material bearing on the timing or outcome of the anti-trust process and the acquisition is still expected to complete by the end of March 2016," said RPC Group Friday.
RPC Group will fund the deal through a combination of debt and RPC equity, in the form of the one-for-five rights issue, with up to 50.6 million new shares to be issued at 460.0 pence each. That was originally announced on Monday and the rights issue will close on December 29.
The rights price represents a 40% discount on the closing price last Friday, the trading day prior to the announcement, and an 35% discount taking into account the enlarged share base and other items.
The debt component of the financing arrangements also led RPC's revolving credit facility being increased to GBP770.0 million from GBP490.0 million.
RPC believes the rights issue and acquisition are expected to boost the combined group's earnings per share in the first full year of ownership following the acquisition.
RPC Group shares closed up 0.6% to 823.0 pence per share on Friday.
By Joshua Warner; [email protected]; @JoshAlliance
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