United Kingdom-based plastic packaging company RPC Group plc has terminated talks with U.S. private equity firm Bain Capital, but is still in negotiation with New York-based Apollo Global Management for a buyout.
RPC announced Dec. 3 that it had mutually agreed with Bain to terminate discussions, but extended the deadline for the buyout offer by Apollo, for a third time, to Dec. 21.
RPC announced in September that it was in preliminary discussions with two U.S.-based private equity firms over the offers which could value the firm at £2.8 billion ($3.56 billion).
The move has been in response to what RPC Chairman Jamie Pike has described as pressure by investors.
"Pressure on the company's market valuation and differing investor views on the appropriate level of leverage is constraining the group's ability to pursue some attractive opportunities for growth, and your board is working to resolve this," Pike said in an July 18 statement.
"In the short-term, the group will prioritize cash generation and the announced disposal of our non-core businesses, with a view to generating increased capital for deployment in the business or further returns to shareholders,” Pike added.
RPC was approached by the two private equity firms with the buyout offer after that statement.
RPC, which has been on an acquisition trail in the past few years, saw its shares drop in March following a report by Northern Trust, which accused the company of disguising structural problems with many of the acquisitions it had made.
A Financial Times article in March 2017 quoted Northern Trust analyst Paul Moran as saying that RPC management had been encouraged to pursue value-destructive acquisitions by “innovative” bonus schemes and “some of the most aggressive accounting we have seen.”
RPC reported a 36.4 percent year-on-year increase in sales at £3.74 billion ($4.7 billion) for the full year 2017, with adjusted profit before tax up 36.1 percent at £389 million ($494.8 million).
The proposed takeover follows another major consolidation deal in the market, Amcor Ltd.'s $6.8 billion takeover of U.S.-based flexible packaging giant Bemis Co. Inc. That deal is expected to be complete in early 2019.