Astrapak Ltd - Proposed Acquisition by RPC Group Plc (“RPC”)
The Board of Astrapak is pleased to announce that it has received a firm offer from RPC to acquire all of Astrapak’s ordinary shares in circulation through a section 114 scheme of arrangement for a consideration of R 1,370 million on a cash-free, debt-free basis (“Proposed Transaction”).
The deal, which is still subject to shareholder and regulatory approvals typical for a transaction of this nature, will see RPC take over the nine operations that represent the Forming and Moulding Divisions of Astrapak and comprise its continuing operations. For the year ended 28 February 2016 these businesses - which serve mainly consumer and industrial markets using injection moulding, blowmoulding and thermoforming technology platforms - employed 1,100 people and had revenues of R1.4 billion.
In order to facilitate the transaction and to satisfy the relevant conditions precedent, the Group will:
- Propose a scheme of arrangement to voluntarily repurchase the 1.5m preference shares in circulation at a price of R100 per share, which process will go ahead regardless of whether the Proposed Transaction is implemented or not. All accrued preference share dividends to the date of repurchase will be paid in addition to the proposed repurchase price. The market price on 14 December 2016 was R 84.00.
- Unbundle though a dividend in specie and list on the Alternative Exchange of the JSE (AltX) its remaining non-core assets which consists of 3 flexible operations – Penpak, Barrier Films and Geotex-Plusnet - along with certain properties and assets that are deemed to be non-core to Astrapak.
Irrevocable undertakings representing 51.26% and letters of comfort representing 28.40% have already been secured from ordinary shareholders, while 30.83% and 3.23% respectively have been received from preference shareholders.
RPC will be funding the consideration through its existing debt facilities and has lodged the necessary guarantees.
All processes are expected to be completed during the 1st quarter of 2017. Once the transaction is finalised, Astrapak Ltd will be delisted from the Johannesburg Stock Exchange,
Highlights of the Proposed Acquisition from an Astrapak perspective
In line with the five-year plan set some four years ago entitled “Charting a New Course”, Astrapak has made great progress in rationalising and restructuring to be an efficient Moulding and Forming business with operations of scale that are focused on clearly identified core markets and customers.
The last three elements of the plan - namely improving efficiencies, reducing head office costs and bedding down recent investments - are well underway.
Management has also consistently highlighted the desire for international input into the Group in terms of skills development, improving operating performance, innovation and international key account management.
The Proposed Transaction represents an excellent strategic solution for all Astrapak stakeholders – and along with the 2 schemes detailed above will provide:
- For ordinary shareholders, as detailed in the SENS announcement dated 15 December 2016:
- An initial minimum consideration of R6.40 per share representing a 19 % premium to the market price on 14 December of R 5.40.
- Subject to certain agterskot amounts being fully realised, a potential of a total consideration of R7.65 per share representing a 42% premium to the market price on 14 December of R 5.40.
- In addition, a dividend in specie for the unbundled flexible businesses – whose pro- forma net asset value was R 246.91m as at 31 August 2016, representing R 2.04 per share at net asset value at that date.
- For the business, customers and staff - a major international partner that:
- Values the way we operate and the restructuring and refocusing that has been undertaken.
- Can provide immediate support across all technologies, materials and end markets.
- Is focused on growth and innovation.
- Sees the business as a platform for future growth in Africa.
- Is bringing inward investment into the Petro-Chemical Industry, which is one of the South African Government’s key growth and development sectors.
- Can provide skills development where required.
Robin Moore, Chief Executive of Astrapak, commented:
“The offer from RPC represents an exciting opportunity for all of our stakeholders. I believe the proposed transaction enables us to release the underlying value of the Group to our shareholders. It also allows our Flexible businesses the freedom to pursue their own strategy through their unbundling and listing. And most importantly, it provides really exciting opportunities for our staff and our customers. Our Forming and Moulding operations are a scaled down version of RPC and a variety of synergies and opportunities will evolve in both the near and long term. Pim Vervaat, the Chief Executive of RPC, has clearly articulated RPC’s strategy of creating a meaningful presence outside of Europe and using Astrapak to develop a platform from which to serve the high growth Sub-Saharan African market. We are all looking forward to joining RPC and taking up the challenge!”
Introduction to RPC
RPC is an international plastic products design and engineering company listed on the London Stock Exchange. It has a market capitalization of GBP 3.5 billion and a turnover of GBP 2.5 billion. It employs over 20,000 people in 31 countries and services a wide range of customers across both food and non-food markets – including many blue chip companies and has a strong track record of innovation across multiple polymer processes.
The RPC Group’s overall strategy is to grow and develop leading positions in their chosen product markets and geographies in the plastics industry by establishing strong long-term relationships with customers and developing high quality innovative products that meet customers’ needs.
Highlights of the Proposed Acquisition from an RPC perspective
For RPC, the acquisition of Astrapak represents a strategic opportunity to acquire a rigid plastic packaging group of scale (a ‘mini RPC’), with well-established market positions, in a new territory. The proposed acquisition represents an excellent fit with RPC’s Vision 2020 objective to increase its manufacturing footprint outside of Europe. RPC sees Astrapak as platform for growth in the increasingly important Sub-Saharan African market, and believes that the complementary skill-sets can accelerate the group’s prospects. The consideration, based on an enterprise value of the operational assets being acquired by RPC of ZAR 1,370 million on a cash-free, debt-free basis, is equivalent to an enterprise value to underlying EBITDA FY16A multiple of approximately 6.3 times.
RPC has highlighted a number of benefits of the proposed transaction including:
- Acquisition of a ‘mini RPC’ in South Africa with expertise across the three core conversion processes of blowmoulding, injection moulding and thermoforming;
- Extension of RPC’s reach with a number of its existing major international customers;
- A scalable platform from which a further organic and buy-and-build strategy can be initiated;
- A platform to serve the wider Sub-Saharan Africa region as demand for plastic packaging develops over the medium to longer term.
Pim Vervaat, Chief Executive of RPC, commented:
“The acquisition of Astrapak represents an important step in realising RPC’s strategy to create a meaningful presence outside of Europe. Astrapak’s strong market position in South Africa will complement and enhance RPC’s existing operations in the region, an increasingly important territory for us, and also offers an exciting opportunity to develop a platform from which to serve the high growth Sub-Saharan African market. I look forward to working with Robin and the management team in taking Astrapak to the next stage of its strategic development.”