Reuters and other news outlets are reporting that Berry Global Group, a Fortune 500 plastics producer with headquarters in Evansville, Indiana, is considering a cash bid for UK-based plastics packaging manufacturer RPC Group.
The possible bid is viewed as a challenge to a £3.3bn ($4.3bn) offer tabled by private equity firm Apollo Global, Berry’s former parent company.
The Financial Times reports that the news comes about a week after RPC recommended a cash offer from Apollo Global Management, following more than four months of negotiations, and just hours before the deadline for competing bids.
Berry Global is reported to have requested due diligence information on RPC, Europe’s largest plastic packaging company.
According to Reuters, a source with knowledge of the matter said that private equity firm Apollo will not increase its offer of 782p per share, despite the modest premium.
“[Apollo’s offer] is fully funded, it is deliverable in a short space of time and that is the final offer… Apollo is not going to be spooked into a bidding war,” said the source.
Apollo’s offer represents a premium of 15.6% based on the closing share value of RPC on Sept 7 last year, the day before takeover plans began to surface.
“The current offer from Apollo… probably disappointed many investors. A lowball offer certainly leaves the door open to a rival bidder,” Nicholas Hyett, an analyst with Hargreaves Lansdown, told Reuters.
He continued: “An industry buyer, like Berry, would be best placed to make a higher number stack up. A listed player could pay in a mixture of equity and cash – meaning a higher offer may not require substantially more debt than the Apollo deal.”
Craig Yeaman, fund manager at Royal London Asset Management, which owns 1.33% of RPC, said: “Apollo was 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,” Yeaman said.
RPC, a FTSE 250 manufacturer, ended takeover talks with Bain Capital, another US-based private equity firm, in December.
According to the Financial Times, share values for RPC have increased 4.3% today (Thursday) based on the possibility of a higher bid. For its part, Berry has said there is no certainty it will make a bid.