Apollo Global Management has been given another extension to make a formal offer for plastic packaging specialist RPC Group (RPC). The private equity group now has until 18 January to table a bid, with RPC noting that Apollo’s “due diligence is now substantially complete”, so it’s conceivable that an offer could emerge prior to that date.
If a formal offer is tabled, it could flush out rival bids, particularly if it’s perceived as a low-ball approach. And despite the continued furore in the western media over the industry’s links to maritime pollution, the push towards consolidation shows little sign of abating with commercial incentives still intact – and expanding.
Market research from Radiant Insights shows the global rigid plastic packaging market growing at a compound annual rate of 5.57 per cent through 2018-2022, as “applications are rising enormously across the globe”, primarily due to the rapid growth in the e-commerce sector. Another significant factor is the increasing demand for pharmaceutical products among Asia’s rapidly expanding middle classes. None of this would have gone unnoticed by the private equity industry.
By now, you would imagine that any financial permutations arising from European directives on packaging recycling rates and the phasing-out of ‘single-use’ plastic packaging would be factored into share prices, though government commitments remain suitably woolly at this point. Nevertheless, it’s reasonable to assume that regulatory risks are increasing and will have a greater impact on valuations than in previous years.
