RPC (RPC) has accepted a £3.34bn bid from US packaging specialist Berry Global (US:BERY), dealing a hammer blow to private equity firm Apollo Global Management – which had a £3.3bn offer accepted by the RPC board in January – to the consternation of some shareholders.
Berry has offered RPC's shareholders 793p a share, above Apollo’s offer of 782p. Berry chief executive and chairman Tom Salmon welcomed a “transformational combination” that “will create a strong global leader in plastic packaging and recycled solutions”. RPC has adjourned a shareholder meeting, due to take place on 20 March, which had been convened to weigh up Apollo’s offer. RPC will delist from the London Stock Exchange if the deal completes.
The US group put its offer together quickly – it entered the fray on 31 January, eight days after Apollo’s bid was accepted, with a request for due diligence materials. With a deadline of 13 March for a bid, Berry had six weeks to consider its offer for the group.
In contrast, and in a sign that Berry’s expertise in the sector likely gave it the upper hand over Apollo, the private equity group took five months to carry out its due diligence on RPC, owing to “all of RPC’s recent acquisitions and complicated business model,” an Apollo spokesperson said. Apollo normally only needs three months for due diligence, the spokesperson added.
Apollo’s choice of wording in its bid has left it without an avenue to raise its offer. UK Takeover Panel rules around fair operating markets mean that its decision to describe its bid for RPC as 'final' rules out any counter bid from Apollo.
The Apollo offer drew ire from some shareholders in January. It followed four tortuous months of deadline extensions, with Bain Capital also in the mix until December. Alone in the race, some shareholders, including Aviva Investors and Royal London Asset Management, were disgruntled at the 782p offer price and the process that had led to the bid. However, the offer received backing from top-five shareholders Canyon Capital and Eminence Capital.
Royal London appears similarly unimpressed with the Berry bid. Craig Yeaman, senior fund manager, believes that "Berry will be acquiring RPC on an incredibly low valuation".
"It was able to do so because the board of RPC had already agreed to a 'full and final' bid from Apollo," he added, accusing the board of 'failing in their fiduciary duty', in a way that 'left the door open for Berry to bid without any competitive tension'.
The move is even more embarrassing for Apollo owing to its shared history with Berry. Apollo acquired Berry Plastics in 2006, before listing the packaging group on the New York Stock Exchange in 2012. Apollo senior partner Robert Seminara resigned from the Berry board prior to Apollo’s bid, although he remains listed as a board member on Berry’s website. Shares in RPC and Berry were flat in response to the bid’s announcement.
