Rigid plastic packaging and engineering group RPC Group plc has moved into the flexible film sector by agreeing to buy British Polythene Industries plc (BPI) for 261million pounds ($377.9 million).
The deal, announced June 9, will be funded by a cash and share offer. RPC will offer existing BPI shareholders 470 pence for every BPI share together with a 0.60141 of a new RPC share.
It will immediately expand RPC into film production with an international footprint. BPI has facilities in Canada, Belgium, the Netherlands, Ireland and the United Kingdom and makes everything from trash bags and agricultural film to food wrappers. It also has in-house film recycling, with BPI saying it is one of the biggest film recyclers in Europe.
The company produces 275,000 metric tons of film per year.
RPC currently has blow molding, injection molding, thermoforming, rotational molding, vacuum forming and in-house tooling.
RPC is placing new shares on the market in order to raise approximately 90 million pounds ($130.3 million) to help fund the acquisition.
The proposed transaction, which suggests a 30 percent premium to BPI's closing share price June 8, has the backing of BPI's board, and is subject to regulatory clearance. It is expected to be completed by the end of August.
The deal is forecast to produce 10 million pounds ($14.5 million) worth of annual savings, once the integration of the business has been finalized.
In a statement RPC's chief executive Pim Vervaat said: “The proposed offer for BPI represents a compelling strategic opportunity for RPC to enter the European polythene films market through an established platform. BPI has a strong product portfolio with attractive market positions in its core markets in Europe.
“The combination will further broaden RPC's range of polymer conversion technologies in line with global peers, establish a new growth platform with a strong cost synergy potential whilst enhancing the group's overall polymer buying capability.
“I believe the combination of RPC and BPI is an excellent strategic fit and look forward to growing the enlarged platform to continue generating value for our customers and our shareholders.”
Cameron McLatchie, BPI's chairman, said RPC had recognized the value of his firm, its recent trading performance and future prospects, by making an offer “at an attractive premium to the share price.
“BPI's business should benefit from the ability of a larger group to expand its footprint in Europe and beyond. Shareholders will benefit from enhanced liquidity for their investment, and employees will have access to the opportunities available in a larger group.
“The BPI board is therefore unanimously recommending acceptance of the offer.”
The deal follows a number of acquisitions undertaken by RPC in the last year, designed to broaden its sector and geographical footprint.
RPC said the acquisition was an excellent fit with its Vision 2020 strategy, focused around what it called selective consolidation in Europe, and was a “unique strategic opportunity to acquire an established flexibles platform in the European polythene films market with strong market positions.”
Other factors included an entry into an adjacent polymer-consuming market “and increasing the range of polymer conversion technologies within RPC, in line with other global players,” plus an opportunity to pursue what it called a “parallel buy-and-build strategy in flexibles alongside RPC's existing strategy in rigids.”
The deal would also enhance the group's longer term overall polymer purchasing position, as well as creating an enlarged platform to generate cost, purchasing and efficiency savings.