Thursday 31 January 2019 9:36 am | Updated: Monday 03 June 2019 2:28 am

RPC Group takeover: US-based Berry Global threatens to crash Apollo’s party

Private equity firm Apollo’s takeover of plastic packaging manufacturer RPC group has come under threat after US company Berry Global said it was considering making a counter offer.

Berry, another a plastic packaging supplier, said it had reached out to RPC for the due diligence information needed to make an offer, but also stressed it the announcement “does not amount to a firm intention to make an offer”.

Just a week ago, it looked as if a £3.3bn offer from Apollo was all but sealed, announced after months of wrangling and hours before the regulatory deadline. But disquiet among RPC shareholders, some of whom felt they were getting a raw deal.

Under Apollo’s offer each RPC shareholder would get 782p cash for every share they own, 15.6 per cent up on the 683.6p closing price on 7 September, the last day before talks were confirmed.

The deal has rankled at least two of RPC’s top 15 shareholders – Aviva Investors and Royal London Asset Management said the payout was not high enough, given RPC’s future growth prospects.

Today Craig Yeaman, fund manager at Royal London Asset Management, said: “We noted last week that another bidder entering the fray should not be discounted given the low valuation of the agreed deal. Apollo were always going to run this risk having pitched the bid at this level which has clearly given others encouragement.

“Berry Global, being a competitor to RPC, would have plenty of synergies to go after and the first casualties could include senior management who were so willing to accept Apollo’s offer.”

RPC shares rose 3.7 per cent in early trading to 794p – 12p higher than Apollo’s current bid.

RPC is one of Europe’s biggest plastic packaging manufacturers, making products including bottle tops and asthma inhalers.

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown: “The current offer from Apollo is lower than we had expected, and probably disappointed many investors. A lowball offer has left the door open to a rival bidder, and an industry buyer like Berry would be best placed to make a higher number stack up.

"There’s potential for operating synergies, always a key consideration in packaging M&A, and a listed player could potentially pay in a mixture of equity and cash as well – although Berry have said they are interested in making a cash offer.

"With RPC shares now trading above Apollo’s ‘final’ offer price, it looks like could yet be some life in the RPC bidding war.”

Near the end of last year RPC said its profits had dipped slightly, as adjusted profit before tax fell two per cent to £188.9m in the six months to September 2018.

Revenue for the six months was £1.892bn, a seven per cent increase on the same period last year.

Morning Wire has approached RPC for comment.