RPC stuns market with £261m deal for BPI

Rigid plastics packaging giant RPC has agreed to buy one of Europe’s leading flexibles groups, British Polythene Industries (BPI), in a £261m deal.

The boards announced this morning that they had reached agreement on the offer. RPC said that the acquisition was “strategically compelling”. BPI is a polythene films producer and allows RPC to buy an established flexible player in the European market with a strong market position.

The deal is the latest in a series of acquisitions by the listed rigid plastics group, which have included Global Closure Systems, M&H Plastics, Promens and Superfos in recent years.

It brings together a major European supplier of polyethylene films with its biggest rigid plastic packaging supplier and represents a game-changing move into flexible plastic packaging for RPC.

In its latest accounts, BPI reported annual turnover of £468m. If and when the deal goes through, this, added to RPC’s £1.642bn turnover reported last week, would make RPC a £2bn-turnover business in the year that it celebrates its 25th anniversary.

‘Compelling strategic opportunity’

Pim Vervaat, chief executive of RPC, said: “With today’s announcement, RPC is taking another important step in delivering its Vision 2020 strategy.

“The proposed offer for BPI represents a compelling strategic opportunity for RPC to enter the European polythene films market through an established platform.  BPI has a strong product portfolio with attractive market positions in its core markets in Europe.

“The combination will further broaden RPC’s range of polymer conversion technologies in line with global peers, establish a new growth platform with a strong cost synergy potential whilst enhancing the Group’s overall polymer buying capability.

“I believe the combination of RPC and BPI is an excellent strategic fit and look forward to growing the enlarged platform to continue generating value for our customers and our shareholders.”

‘Bigger footprint’

Cameron McLatchie, chairman of BPI, added: “The last five years have seen consistent improvements in BPI’s performance and prospects, but not all of this progress has been reflected in the price or rating of BPI’s shares. RPC has recognised the value inherent in our business and prospects by making an offer at an attractive premium to the share price.

“BPI’s business should benefit from the ability of a larger group to expand its footprint in Europe and beyond. Shareholders will benefit from enhanced liquidity for their investment, and employees will have access to the opportunities available in a larger group. The BPI board is therefore unanimously recommending acceptance of the offer.”

Observers said that the deal confirmed RPC’s position as a major consolidator in the industry over recent years and that it would open up new possibilities for both businesses.

Packaging M&A expert Nicholas Mockett of Moorgate Capital said: “RPC could in future supply the market with its sophisticated rigid packaging products and also polyethylene film.”

But he added: “With any public company takeover, even where the offer is recommended, the possibility of an interloper making a rival bid cannot be ruled out, as we have seen with Dow DuPont.”