Rpc Share Discussion Threads

[dr_smith] 01/2/2019 17:17

Billywhizz1.
Hope I'm not intruding as remark direct to Jeffian.

Re "firm commitment not to increase their offer", I have seen similar things in the past but offer increased. Every acquisition is different in legal terms, so hard to read across for this one, but can't help thinking they could come back with something like "upon review" or "in the light of the competeting offer we are prepared to increase" and just side-step the "commitment" as simple as that.
It seems every rule has its exceptions and workarounds, don't know how solid it is, but can't help feeling it won't stop Apollo if in their interests.

As I think mutually felt, Berry likely have more margin with synergies etc to enhance profitiability, and can be continued good in long term too, whereas for apollo, it's just something to buy, re-package and sell on in short term for one-off gain, so little margin means little interest.

IMV :-)
Dave

[billywhizz1] 01/2/2019 16:18

Jeffian.

Perhaps an element of confusion and misunderstanding is creeping in here. Of course Apollo have rather stupidly made a firm commitment not to increase their offer, well that's fine. So let's assume that Berry make an offer. They will have to calculate the cost savings through synergies which will give them a bid price margin. Assuming that the finance is in place, based on Apollo's low pitch bid plus whatever percentage out of this margin they deem fit to add to Apollo's low figure, will be the figure for their bid offer. With the benefit of hindsight, they will assess, what in their view would be the level of their offer that the main shareholders could reasonable be expected to accept, as they wouldn't want to go down the same road that the other clowns went down.

[bouleversee] 01/2/2019 14:12

I see Goldman Sachs are advising Berry now so the fact that they are buying presumably means they expect the price to go up which might make one think they expect Berry to make an offer.

[jeffian] 01/2/2019 12:29

Incidentally, an updated "Letter of Intent" from Eminence has appeared on RPC's website today confirming that they still intend to support Apollo's bid. As it's "non-binding", I'm not sure what comfort Apollo can draw from that!

[jeffian] 01/2/2019 12:27

billywhizz1,

I was picking up on your point about re-opening competition if another bid arrives.

So far as the Directors are concerned, having been through this process myself, it was a bit remiss of them not to have negotiated a get-out clause if a substantially higher bid appears. This would not be unusual. I had one. In this case they are bound to accept unless Apollo's offer lapses.

Regarding the ongoing conduct of the bid process, can you show me which part of the "LSE rules" would allow Apollo to renege on its statement "The Bidder's offer is final and the Consideration will not be increased".

[billywhizz1] 01/2/2019 11:49

Forgot to say, share price still trading at a decent higher price than Apollo offer. I know this is down to a multitude of circumstances and valid reasons, but nevertheless, a 'spades a spade' for whatever reasons.

[billywhizz1] 01/2/2019 11:41

Hi Jeffian, I understand what your saying, but 'an undertaking to accept an offer is totally different than 'accepting an offer'. You have to understand that any BoD has to declare their private board voting result to their share holders. If they didn't do so how would anybody now what their board's democratic position was, but remember it's a position which is subject to ratification or otherwise. The other point is that the LSE work to all panels rules for share sell/buy procedures.

[bouleversee] 01/2/2019 11:34

I see that Goldman Sachs now hold 7.76% of voting rights. Aren't they advising Apollo? Concert party?

[spot1034] 01/2/2019 11:34

A 2.9 per cent decline in the Berry share price doesn't seem particularly extreme to me and I wouldn't interpret it as a particularly strong signal of negativity. In fact I wouldn't make much of it at all. If the percentage was into double figures that might be noteworthy, but a movement of 2.9 per cent is something you might see on many days of normal trading.

[bouleversee] 01/2/2019 11:29

There is another big article on p45 of TT by the Senior City Editor, headed US rival gatecrashes Apollo's £3.3bn takeover bid for RPC (you should be able to read if you google the heading)which also says that Apollo can't raise bid under both US takeover rules and under Britain's takeover code. I presume they must know what they are talking about, though I am sure I had read elsewhere that once another bid was made they could up theirs. Maybe that's only if they haven't said "final".

I can't help thinking that if the BOD have cooked up a nice deal for themselves, they will do their best to put off any other bidders.

What did you experts think of today's trading statement?

[budgiekevin] 01/2/2019 11:01

Re the Reuter’s comment by Ed Cropley posted by Warik. He uses the cost savings from the Letica acquisition to prove his theory. Another method of picking cost savings would be the 6% achieved by RPC on the acquisitions of BPI/GCS/Promens where savings of €95 mil were reported as achieved and on target to achieve €105 mil. IMO if the combined business selling some USD 12 billion can only achieve £42 mil (apol’s for mixing currencies) then someone is having a laugh. In reality the savings are most likely going to be somewhere between 1.1% and 6% and depending on what your trying to prove you pick any number.

[jeffian] 01/2/2019 10:57

By the way, I've also been looking through the "irrevocable undertakings" to accept Apollo's offer which are published on RPC's website. The Director's have committed themselves to accept the offer with no wiggle-room whatsoever, even if a higher bid emerges. I bet they're kicking themselves! I also noticed this in the letter from Eminence Capital, who have pledged (some of) their shares to accept the offer -
"The statements of intent in paragraph 3 are non-binding, and nothing in paragraph 3 is intended to, nor shall it, create any legal obligation or liability on us." Some support, eh?!

[warik] 01/2/2019 10:56

I agree with all 3 as i have read that report on the news. Apollo will have to sit until everything concludes having said that the big investors may accept the offer in fear of the share price drop so little retail investors could profit/loss depending at what price they got in.

As one of the investors who backed Apollo has already sold some of its shares at higher than Apollo's bid and there is nothing to stop from others to do. If everybody does sell the share price will plummet and i am not sure if there is appetite for RPC stock in the market as i can sell sell at highs and buys at lower than the sell price. Again i assume the same people are buying buy at a lower price.

[whatsyourgame] 01/2/2019 10:53

Another interesting piece with some sound advice from Alistair Osborne in today's "Times":

"Doing over your former owner is always a laugh. And where better than at RPC? After four months of talks, the plastics maker has rolled over and recommended a 782p-a-share bid from private equity outfit Apollo. And at a skinny premium to boot, only 15.6 per cent, including the interim dividend (report, page 45).

Indeed, when RPC chairman Jamie Pike bobbed up with the £3.3 billion deal nine days ago, the verdict was pretty unanimous. As Numis Securities put it: it was a “low” price but “we do not expect competing bids”.

Well, now look what’s happened. Berry Global has turned up late to the party, with the news that it is considering a possible offer in cash for RPC; enough to send the shares up 4 per cent to 795p. Who’s Berry? The US plastics outfit — owned for eight years by Apollo. In fact, Apollo was key to building Berry, investing $550 million in 2006, floating it in 2012 and making 3.5 times its money by the time it sold out. The links to Berry continue to this day: its ex-boss Jonathan Rich has been advising Apollo on its offer for RPC.

And now Berry’s gatecrashing its bid. How’s that for gratitude? It gets worse because Apollo made its offer “final”. So, unless it finds a miracle way out, it’ll have to sit and watch, powerless to intervene, even if Berry offers a mere 1p a share more.

Two RPC shareholders, Aviva Investors and Royal London, had already declared Apollo’s offer too low-ball. So it was no shock to hear Royal London’s Craig Yeaman declare that a putative new bidder “vindicates investor caution”. As he put it: “Apollo were always going to run this risk”, given the bid price.

Neither does it reflect brilliantly on the RPC board. Yes, they had an auction — a process that saw rival bidder Bain Capital drop out. And RPC’s five financial advisers tried months ago to lure Berry. But it still doesn’t say much for the directors’ faith in their own skills that they recommended a bid at a 26 per cent discount to peer group valuations.

Even so, there’s a long way to go. Who knows if Berry’s just on an opportunistic fishing expedition to get info on rival RPC — always a possibility when the chairman’s a Pike. Or if it’s really serious, cleverly waiting until the buyout house with the best knowledge of the sector, Apollo, had found no hidden nasties at RPC: a sort of due-diligence by proxy. Pouncing when Apollo can’t hit back looks doubly smart.

Yet, Berry’s still got to go through both RPC’s books and its 32 sub-divisions. And its investors already seem lukewarm, with its shares falling 2.9 per cent to close at $49.25 in New York. Berry has little business in Europe, too — a boon for regulatory clearance but a possible bar to wringing out those £150 million-plus synergies on JP Morgan Cazenove estimates. Financing a deal looks tricky, too, with Berry almost four times geared. Deliverability must be an issue.

So Apollo, which insists it’s paying a full price, may yet win. With RPC shares above the offer price, selling a few now would hedge against that."

Fair enough as far as it goes, but Mr Obsorne seems to ignore the very real possibility that PRC may simply decide that Apollo's offer is too mean and choose instead to simply reject it. After all, the level of acceptances so far ar pitifully small

[bouleversee] 01/2/2019 10:41

I can understand your doing that, Warik, but it's somewhat less tempting for those of us who acquired our shares by takeover when the share price was much higher and have topped up at higher prices than 797. I'm holding on in the hope that SLA and other shareholders will vote against the deal and/or that Berry or someone else will make a higher offer. It's a gamble but that's what stockmarket investing is these days and there's an element of principle in it as well for silly me.

[whatsyourgame] 01/2/2019 10:33

warik ... That's fine and understandable from your perspective, but I'm sure you understand that those of us who have seen the share price above 1000p per share a couple of years ago see things rather differently.

[warik] 01/2/2019 10:19

@whatsyourgame

I thought about it and read somebodys piece which i have posted here for all to read why he thinks/opinion Berry wont up the price.

I only sold it in fear that if Berry walks away the max i will get is 782. The up side could be huge but if Apollo took 4 months for DD i didnt want to wait another 4 months for Berry maybe just to walk away realising they have to pay more plus debt etc.

I still think if people sell at this price which is more than 782 and then it drops at say 760s range like before you could still make money.

The whole thing is getting just boring to me as there is so much uncertainty and i feel Apollo will not budge and wont raise in that case if the big investors refuse this could come back in 650 range which would be waste of my time for 5 months so i cashed out made nearly 1300 would have loved more but its better than losing.

[warik] 01/2/2019 10:13

BRIEF – Apollo Management Gets Letter Of Intent From Eminence Capital For RPC Deal

Apollo Management- Bidder Received A Letter Of Intent From Eminence Capital To Vote In Favour Of Scheme At Court Meeting For Rpc Deal

Apollo Management- On 31 January 2019, Eminence Capital Informed Bidder That It Had Sold 726,169 Of Controlled Shares

Apollo Management- As At 31 Jan, Eminence Capital Letter Of Intent Remains Valid In Respect Of 2,27 Million Rpc Shares

[whatsyourgame] 01/2/2019 08:51

Quite so warik, but then again it wouldn't take too much (say an offer at 840p from Berry i.e. +7.5% on Apollo's offer and for Apollo (or ano) to then counter at 900p +7.0%) to result in shareholders getting a very much better and ultimately fairish deal.

As I said here last night, I consider Apollo's 782p offer to be dead in the water. Either Global Berry will trump it or even if they walk away, RPC's Shareholders have been alerted to the paucity of Apollo's offer and will therefore likely reject it.

[warik] 01/2/2019 04:18

After tax and fees was around 680 average sold for 797 odd plus 81 dividend not bad but too much turbulence and I didnt expect more than 782 after the offer but if Berry walks away we will get less than what's it now.

[bouleversee] 31/1/2019 21:48

Remind us what you paid p.s.

[whatsyourgame] 31/1/2019 20:20

Michael Pooler - Financial Times 31 January 2019


"Berry Global Group, the US plastic packaging company, is seeking to gatecrash the £3.3bn takeover of its UK competitor RPC by a private equity firm.

Berry revealed on Thursday that it was considering a cash offer for the FTSE 250 manufacturer, one of Europe’s largest plastic packaging makers, and had requested diligence information.

The news comes just over a week after RPC recommended a cash offer from Apollo Global Management, following more than four months of talks and just hours before the expiry of a deadline for the bidder to make its intentions clear. 

However two major shareholders, Aviva Investors and Royal London Asset Management, criticised the bid as undervaluing the company. 

Apollo’s final offer of 782p for each RPC share is a 15.6 per cent premium on the stock’s closing price on September 7, the last day before discussions with Apollo were confirmed.

Some analysts said it was low, but discounted the idea of an alternative buyer emerging so late in the process. Shares in RPC rose 3.7 per cent on Thursday to 795p as investors digested the possibility of a higher bid. 

Indiana-based Berry said there was no certainty it would make an offer.

“A competing offer from an industry player such as Berry, at a premium to the current valuation can be justified, in our view, offering scope for an enhanced offer for shareholders,” said Kevin Fogarty, an analyst at Numis. 

RPC confirmed it had received Berry’s request for information, adding that it would engage with its new suitor in accordance with the takeover code and “in the interests of delivering best value to shareholders”. The UK-based company makes plastic products such as bottle tops, paint pots and asthma inhalers and has grown rapidly through a series of deals to reach annual turnover of £3.75bn.

But questions over its ability to convert profits into cash, and concerns about the impact of tougher rules on plastic packaging, have weighed on its share price over the past year.

Until December, it was also in talks with another private equity group, Bain Capital.

Berry, which supplies products including prescription vials, drinks cups and tapes and generated revenues of $7.1bn in 2017, was owned by Apollo before it was floated in 2012."