British plastic packaging manufacturer RPC Group announced yesterday it was set to buy Icelandic rival Promens Group for €386m (£307m).
The Northamptonshire-based firm is looking to partially fund the deal by raising £200m in a fully underwritten one-for-three rights issue at £320m. The remainder will come from RPC’s existing revolving credit facility, which the company has increased from £350m to £490m.
RPC, which makes packaging for brands such as Heinz and Lurpak, expects the integration of the privately owned Promens to cost €35m. The value of the deal represents a multiple of 6.8 times Promens adjusted earnings for last year.
Promens employs approximately 3,800 people at its 40 facilities, five of which are based outside of Europe. For the year ended 31 December 2013, the company recorded revenues of €582m and profit before tax of €57m.
RPC chief executive Pim Vervaat commented: “Today’s announcement marks a key strategic milestone for RPC in line with our Vision 2020.
“The combination of RPC and Promens provides a unique opportunity to create an enhanced platform of scale across our core European end markets. The enlarged group will benefit from opportunities to extend its product and technology offering across the full breadth of its combined operations as well as to achieve cost efficiencies.
“RPC and Promens are a natural fit and we look forward to developing our enlarged platform to deliver superior value for our customers and shareholders in the future.”
Rothschild served as financial adviser and sponsor on the deal, with Deutsche Bank and Panmure Gordon acting as joint bookrunners, and HSBC as co-lead manager.
The RPC was established in 1991 following the management buyout of the plastic operations of Reedpack from SCA.
The LSE-listed company’s share price jumped 6 per cent in trading yesterday following the news.
BEHIND THE DEAL
PANMURE GORDON| RICHARD GRAY
1 Gray joined Panmure Gordon in 2002 having previously worked at Charterhouse, UBS and Hoare Govett.
2 Beyond his secondaries and advisory work, he has also advised on the £1.1bn float of Just Retirement and the £1.8bn IPO of life insurer Partnership Assurance.
3 A self-confessed workaholic, Gray has very little spare time. But when he does manage to extract himself from the office, he enjoys a round of golf.
Rothschild’s Charles Montgomerie and Yuri Shakhmin; Deutsche Bank’s Lorcan O’Shea, Charles Wilkinson and Drew Price; Panmure Gordon’s Andrew Godber and Tom Salvesen; and HSBC’s Mark Dickenson and Richard Fagan.