RPC extends deadline for Apollo buyout offer again

RPC Group Plc is still in talks with US private equity fund Apollo Global Management over a potential buyout offer, having extended the submission deadline for a fourth time. 

In a 21 Dec statement, the UK packaging giant said the discussions were “well-advanced” and that Apollo had confirmed that its diligence was “substantially complete”. 

RPC has now given Apollo until end of business 18 January to announced whether it has the intention to make an offer for RPC or not. 

The Rushden, Northamptonshire-headquartered packaging specialist announced in September that it was in talks with two US private equity firms – Bain Capital and Apollo – over a potential buyout offer which could value the firm at £2.8bn (€3.1bn).  

On 3 Dec, the company said it had mutually agreed with Bain Capital to terminate discussions but extended the deadline for the buyout offer by Apollo from 3 Dec to 21 Dec. 

The move to sell the company has been in response to what RPC chairman Jamie Pike has described as pressure by investors. 

"Pressure on the company’s market valuation and differing investor views on the appropriate level of leverage is constraining the group’s ability to pursue some attractive opportunities for growth and your board is working to resolve this," Pike said in an AGM trading statement in July last year.

"In the short-term, the group will prioritise cash generation and the announced disposal of our non-core businesses, with a view to generating increased capital for deployment in the business or further returns to shareholders,” Pike added.

RPC, which has been on the acquisition trail in the past few years, saw its shares drop last March following a report by Northern Trust, which accused the company of disguising structural problems with many of the acquisitions it had made.

An FT article on 22 March 2017 quoted Northern Trust analyst Paul Moran as saying that RPC management had been encouraged to pursue value-destructive acquisitions by “innovative” bonus schemes and “some of the most aggressive accounting we have seen”.

"He argued that RPC’s definitions of adjusted profit and free cash flow had been inconsistent over the past five years, and had flattered the figures in ways that sometimes 'defy accounting logic'," the FT report added.

RPC reported a 36.4% year-on-year increase in sales at £3.74bn for the full year 2017, with adjusted profit before tax up 36.1% at £389m.