A financial expert has forecast that RPC is “a growing force to watch in the packaging market” following the firm’s plans to buy British Polythene Industries (BPI) for £261m.
The deal will see RPC offer existing BPI shareholders 470p for every BPI share, together with 0.60141 of a new RPC share.
RPC is placing new shares on the market in order to raise approximately £90m to part fund the acquisition.
Commenting on the deal Barry Sheehan, associate director at international mid-market mergers and acquisitions and debt advisory firm Livingstone, said:“RPC’s acquisition of BPI represents a strategic shift into flexible plastic packaging for RPC, which had previously focused on rigid packaging, and is now able to offer a comprehensive product offering across the globe”.
The multiple of 8.5x [of 2015’s earnings before interest, taxes, depreciation and amortisation] represents a strategic premium; 31% over the last month’s average share price. This premium can be justified by BPI’s scale and market share, as well as the potential for synergies between both companies’ packaging materials product offerings.
As well as an expansion of its product line and geographical footprint, the deal will allow RPC to increase its buying power and reduce unit costs when sourcing materials. A lucrative deal, it is forecast to produce £10m worth of annual savings for RPC, once BPI has been fully integrated.”
The deal positioned RPC as one of the leading consolidators in the sector, he said: “It is a growing force to watch in the packaging market.”