Apollo Management Group LLC has made a firm, multibillion-dollar offer for global plastics company RPC Group plc, but the ball may be on its way to Berry Global Group Inc.'s corner.
At least for now.
Berry has signaled potential interest in making a rival bid for RPC but has yet to commit to an actual offer.
That move gives the Evansville, Ind.-based company time to perform due diligence on RPC and determine whether it wants to make a rival bid.
And while the move, under United Kingdom financial regulations, gives Berry some time, the company still must work toward a decision in a timely manner.
Berry gets the wiggle room because Apollo came out with the unusual move of declaring its $4.3 billion bid for Rushden, England-based RPC as a "final" offer.
That wording has specific meaning in U.K. regulatory language and precludes Apollo from upping the number in the future.
So Berry, or any other company for that matter, has the opportunity to come in and sweeten the pot on Apollo's offer that was previously accepted by RPC.
Berry CEO Tom Salmon, on a Feb. 1 conference call to discuss quarterly financial results, said he could not field questions on the situation.
"We are considering a possible offer for RPC Group plc," Salmon told stock analysts on the call. "We will utilize our proven, disciplined approach to complete our diligence process and access the shareholder value creation opportunities alongside other opportunities."
Salmon, in his brief remarks, was not specific about those "other opportunities."
"There is no certainty that an offer will be made," he warned. "Further announcement in relation to RPC will be made … when appropriate."
While Berry was showing an interest in RPC, the Apollo bid also received a boost from an existing shareholder, according to Plastics News Europe, a sister publication of Plastics News.
Eminence Capital announced that it had sold 726,169 of its controlled shares in RPC to Apollo on Feb 1. The New York-based hedge fund sponsor, which holds more than 7 percent of RPC shares, also confirmed that its letter of intent was valid in respect of its remaining 2.27 million RPC shares, PNE reported.
Prior to the publication of its Jan. 23 offer, Apollo had received a letter of intent from Eminence Capital, which said it would vote in favor of the acquisition.
"There is generally a sense of silent approval among the shareholders for the Apollo takeover," a source close to the deal told Plastics News Europe.
When Berry Global Group changed its name from Berry Plastics Group almost two years ago, it was a sign of future aspirations of the plastics company. Adding the word "global" was meant to send a message to the market, the company's customers and even potential takeover candidates.
Berry, thanks to a string of acquisitions in recent years and over time, has grown into an company with $7.9 billion in annual sales, and the potential acquisition of RPC would add another nearly $5 billion in annual sales in one fell swoop.
It's a company that, over the decades, has relied on dozens of acquisitions to grow, and that approach is a source of pride in the company's culture.
RPC dates to 1991 when a manager purchased five locations in the United Kingdom from Svenska Cellulosa AB, or SCA, a Swedish company better known for its paper and forest products businesses.
That firm has grown tremendously in size over the years, thanks in part to its own series of acquisitions.
That includes 2017's purchase of Letica Corp. of Rochester Hills, Mich., a deal that more than doubled its North American business by adding 13 plants at the time.
The company, also in 2017, acquired Astrapak of South Africa, a maker of molded and thermoformed plastic packaging, as part of a flurry of takeover activity.
RPC makes plastic products in "all five major conversion processes," the company says in its annual report: injection molding, blow molding, thermoforming, rotational molding and blown film extrusion.
Acquiring RPC would bring another 24,000 employees to Berry, which now employs about 23,000, according to its website. Berry has more than 130 locations, mostly in North America. The company has been expanding beyond that traditional territorial stronghold in recent years and now has several locations in Europe, Asia and South America.
Berry is a powerhouse in plastics processing in North America, ranked at No. 1 for film and sheet in PN's latest ranking for the region. It is in the top 10 for both injection molding and thermoforming according to PN's ranking and lands at No. 11 for blow molding.
There is a question of whether Berry would want to take on even more debt to acquire RPC.
Uncertainty has been surrounding RPC for months now as two private equity funds initially showed interest in the firm.
Both Apollo and Bain Capital started considering their options last fall, with RPC eventually ruling out Bain while still engaging Apollo late last year. RPC extended the deadline for Apollo to make an offer four separate times as the two sides talked.
Interest in RPC started to simmer after Chairman Jamie Pike revealed last summer the company was under pressure by investors to make changes.
Berry is being advised by both Goldman Sachs and Wells Fargo Securities in determining whether it will make a run at RPC. The company now finds itself in a position of potentially making a rival bid against Apollo, which previously owned Berry.
