Apollo seals $4 billion deal for ketchup-to-lotions packager RPC
Following the unveiling of the deal, RPC shares rose as much as 5.5%, the most in four months, to reach 774 penceThe industry has seen a wave of consolidation — $34 billion worth of deals in the past 12 months alone
Apollo Global Management agreed to buy British packaging maker RPC Group Plc for 3.32 billion pounds ($4.3 billion), wading into a sector that's fallen out of favour as a backlash builds against plastic waste.
Shareholders of the supplier of containers for Kraft Heinz Co. sauces and Nivea beauty products will receive 782 pence a share in cash, RPC said in a statement Wednesday. That's 16% higher than its closing price on September 7, the day prior to the offer period.
Following the unveiling of the deal, RPC shares rose as much as 5.5%, the most in four months, to reach 774 pence.
In acquiring RPC, Apollo will be looking to replicate its investment in US-based Berry Plastics, a packaging maker that went on to make 14 acquisitions. The industry has seen a wave of consolidation — $34 billion worth of deals in the past 12 months alone — as companies compete for global clients and seek economies of scale. Yet RPC was hampered by concern among some investors about over-borrowing, according to RPC Chairman Jamie Pike.
Pound financing
Apollo extended talks five times as it sought better terms and arranged financing — highlighting reduced access to sterling-denominated loans caused by Brexit risks, people familiar with the matter said on Tuesday. The buyout group funded the bulk of the transaction in euros and dollars, with some sterling loans that were more costly.
The private equity firm has broad experience in the plastics industry, with at least one notable success. Its prior investment in plastics-maker LyondellBasell Industries is considered a textbook model for a start-to-finish private equity transaction. The US buyout firm said the bid for RPC is its final offer. RPC had also engaged in talks with Bain Capital for a while, only to see the firm walk away last year.
Brexit is said to cut access to sterling, risking UK Deals
RPC grew quickly through acquisitions, although its share price came under some pressure last year amid mounting concerns over the accumulation of plastic waste and its outlook for earnings.
Under Chief Executive Officer Pim Vervaat, the company expanded in China and the US, moving away from simple pots toward more complex containers with spouts and other features, as well as a high content of recycled plastic. While not producing the single-use plastic straws now facing a consumer backlash due to ocean pollution, RPC was drawn into a wider debate over plastic-use versus cardboard and glass.
RPC was advised by Rothschild, Credit Suisse and Evercore.
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