(Reuters) - Berry Global Group is considering a cash offer for British packager RPC Group in a challenge to a 3.3 billion pound ($4.3 billion) bid from the U.S. company’s former parent, Apollo Global.
Apollo agreed to acquire RPC last week after months of negotiations, marking the latest M&A deal in the consolidating packaging sector.
Private equity firm Apollo would not sweeten its offer of 782 pence per share, a source with knowledge of the matter told Reuters, despite grumbling at the relatively modest premium.
“It (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 sort of spooked into a bidding war,” the source said.
RPC, Europe’s biggest plastic packaging company, said that it had received a request for information from plastics maker Berry Global, based in the town of Evansville, Indiana.
“The board of RPC confirms that it will engage with Berry in accordance with its obligations under the (Takeover) Code and in order to advance discussions in the interests of delivering best value to shareholders,” RPC said in a statement.
The packaging sector has seen a series of recent takeovers as investors are drawn to reliable cashflow underpinned by strong demand from online shopping.
RPC’s shares were up 3.7 percent at 793 pence at 1440 GMT, comfortably above Apollo’s offer.
Apollo’s offer represented a premium of 15.6 percent to RPC’s closing price on Sept. 7, the day before reports of takeover interests emerged.
Royal London Asset Management, which owns a 1.33 percent stake in RPC, flagged the low offer price.
“Apollo was always going to run this risk having pitched the bid at this level which has clearly given others encouragement,” said Craig Yeaman, fund manager at Royal London Asset Management.
“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.
(Graphic: Apollo offer fails to cheer RPC investors - tmsnrt.rs/2SffFPf)
Aviva Investors, which owns a 1.93 percent stake in RPC according to Refinitiv Eikon data, has said it does not agree with the terms of Apollo’s offer.
RPC, a FTSE listed mid-cap company, ended takeover talks with Bain Capital, another U.S. private equity firm, in December.
Apollo declined to comment.
RPC was founded in 1999 and produces a range of products from coffee capsules to healthcare products in 34 countries.
Berry Global makes plastic containers, prescription vials and adhesives. Apollo and Graham Partners bought it in 2006 and it was listed in 2012.
Goldman Sachs and Wells Fargo are joint financial advisers to Berry.
($1 = 0.7614 pounds)
Reporting by Noor Zainab Hussain and Pushkala Aripaka; in Bengaluru and additional reporting by Simon Jessop in London; editing by Jason Neely and Keith Weir