UK's RPC Group to acquire S.A's Astrapak for $98mln

PUBLISHED: Thu, 15 Dec 2016 15:26:39 GMT

RPC Group Plc, an international design and engineering company of plastic products for both packaging and non-packaging markets plans to acquire Astrapak for R 1,370 million (£79 million)1 on a cash-free, debt-free basis, is equivalent to an enterprise value to underlying EBITDA FY16A multiple of approximately 6.3 times .

Listed on the Johannesburg Stock Exchange, Astrapak is a leading South African manufacturer of rigid plastic packaging products and components with a broad product offering across injection moulding, blowmoulding and thermoforming technology platforms. The Company serves industrial and consumer markets, supplying customers in Sub-Saharan Africa. Astrapak’s manufacturing footprint comprises nine facilities in South Africa, employing approximately 1,100 people. For the year ended 28 February 2016, the Company achieved revenues of ZAR 1.4 billion (£81million)1. Robin Moore, Chief Executive Officer of Astrapak, will continue to lead the Astrapak business as a stand-alone sub-division within RPC Superfos.

RPC will fund the consideration through its existing debt facilities.

Highlights of the Proposed Acquisition

The Proposed Acquisition of Astrapak represents a strategic opportunity to acquire a rigid plastic packaging group of scale (a ‘mini RPC’), with well-established market positions, in a new territory. The Proposed Acquisition represents an excellent fit with RPC’s Vision 2020 objective to increase its manufacturing footprint outside Europe, and meets RPC’s strict acquisition criteria. South Africa is becoming an increasingly important market and a combination with Astrapak will enable RPC to establish a platform for growth in Sub-Saharan Africa, strategically positioning RPC to expand further into selected high growth African markets. Astrapak’s skill-set is highly complementary and Astrapak is expected to accelerate its progress with the support of the wider RPC Group.

The Proposed Acquisition represents an excellent strategic fit with RPC and offers significant benefits for the Group, including:

  • Acquisition of a ‘mini RPC’ in South Africa with expertise across the three core conversion processes of blowmoulding, injection moulding and thermoforming.
  • Extension of RPC’s contact with a number of its existing major international customers.
  • A scalable platform from which a further organic and buy-and-build strategy can be initiated.
  • A strong position from which to serve the wider Sub-Saharan Africa region as demand for plastic packaging develops over the medium to longer term.
  • Acquisition expected to be earnings accretive from year 1 with ROCE in excess of WACC, whilst RONOA and return on sales levels are expected to be ahead of the minimum hurdle levels of 20% and 8% respectively.

Pim Vervaat, Chief Executive of RPC, commented:

“The acquisition of Astrapak represents an important step in realising RPC’s strategy to create a meaningful presence outside of Europe. Astrapak’s strong market position in South Africa will complement and enhance RPC’s existing operations in the region, an increasingly important territory for us, and also offers an exciting opportunity to develop a platform from which to serve the high growth Sub-Saharan African market. I look forward to working with Robin and the management team to take Astrapak to the next stage of its strategic development.” 

The Proposed Acquisition will be implemented via a Scheme of Arrangement.

The Proposed Acquisition is conditional upon obtaining certain regulatory approvals as well as the requisite approvals being obtained from Astrapak’s ordinary and preference shareholders. Prior to this announcement, Astrapak has secured written irrevocable undertakings and letters of support from selected Astrapak shareholders, representing approximately 75% of Astrapak’s issued ordinary share capital, confirming that they will vote in favour of all resolutions required to give effect to the transaction. The Proposed Acquisition is expected to complete in the first quarter of 2017.

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