Packaging company RPC Group has recommended an improved offer from plastic packaging peer Berry Global that outbids the £3.3 billion offer made by private equity group Apollo Global Management at the end of January.
The bid from Berry Global, which values RPC at £7.93 per share – higher than the £7.82 per share that Apollo Global Management was offering – has been recommended to RPC’s shareholders by the company’s board. They say it “represent a superior offer for RPC shareholders”.
The recommendation for Apollo’s earlier offer has been withdrawn.
When FoodBev reported the offer from Apollo in January, some were suggesting that the sale price fell short of “what analysts had suggested was possible”. But Nicholas Hyett, an analyst for Hargreaves Lansdown, said that against a backdrop of intense public scrutiny over plastic waste, it would be “a bit much to expect” another company to outbid Apollo’s offer.
But that is just what Berry Global, through its subsidiary Berry International Holdings, has done. The Indiana-based business makes a variety of flexible, rigid and hybrid plastic packaging for food and other industries, as well as protective solutions like films and sheeting.
It also produces an extensive line in tapes and adhesives, and made an operating profit of $761 million from total sales of $7.87 billion last year.
The company had already made public the possibility that it may bid for RPC, after Apollo’s offer in January.
The deal is the largest in the packaging sector since Amcor agreed to acquire Bemis last year – a statement that would have still been true had Apollo’s deal gone ahead.
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.
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