Packaging group BPI agrees to £261m takeover

British Polythene Industries (BPI), the Greenock-based packaging firm, has agreed to a £261 million takeover offer from rival RPC.

BPI has agreed to a takeover offer from rival packaging group RPC. Picture: Chris Clark

Under the deal, BPI shareholders will receive 470p in cash plus 0.60141 RPC shares for each share they hold in the business.

The offer values BPI, led by chief executive John Langlands, at about 940p a share – representing a premium of about 30 per cent on yesterday’s closing price of 725p.

BPI chairman Cameron McLatchie said: “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.”

In February, the company unveiled an operating profit of £28.6m for 2015, up from £26.7m the previous year, despite sales falling 6.2 per cent to £468m.

Sales were hit by the impact of exchange rates and lower demand from some sectors across the UK, including the loss of an unprofitable contract to supply refuse sacks to a “major retailer”.

McLatchie added: “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.”

RPC said the acquisition of BPI was “strategically compelling” and would give it an “enlarged platform to generate cost, purchasing and efficiency savings”.

It noted that the tie-up would involve “some headcount reductions” at both firms, mainly at their head offices and central functions, although the extent of any cutbacks is yet to be decided.

“RPC will aim to retain the best talent across the combined group and intends to operate one head office,” the company said. “RPC has no other current plans affecting the employment, assets, facilities and/or locations of BPI’s business.”

Chief executive Pim Vervaat added: “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.”

Commercial law firm Maclay Murray & Spens is advising BPI on the proposed takeover. Partner Brian Moore said: “This is perhaps the highest-profile corporate deal of the year so far in Scotland.

“The proposed transaction will be transformational for both parties. It will give BPI the opportunity to expand and grow its business globally as part of a much larger corporate group, and RPC an established platform in the European polythene films market.”