RPC enters flexible film market; agrees to buy British Polythene Industries

Plastic packaging and engineering group RPC has moved into the flexible film sector by agreeing to buy British Polythene Industries (BPI) for £261million.

The dealwill be funded by a cash and share offer. RPC will offer existing BPI shareholders 470p for every BPI share together with 0.60141 of a new RPC share.

RPC is placing new shares on the market in order to raise approximately £90million to part fund the acquisition.

The proposed transaction is subject to regulatory clearance and is expected to complete by the end of August 2016.

It is expected to create around £10million-worth of annual savings, once the integration of the business has been finalised.

RPC’s chief executive PimVervaat says that the proposed offer for BPI represents a compelling strategic opportunity for RPC to enter the European polythene films market through an established platform.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.

BPI supplies approximately 275,000 tonnes of polythene film a year for a range of markets including agriculture and horticulture, industrial and consumer products, food and related packaging and recycled products. The firm is also said to be one of the largest recyclers of waste polythene film in Europe.

The deal follows a number of acquisitions undertaken by RPC in the last year, designed to broaden its sector and geographical footprint.

RPC said the acquisition was an excellent fit with its Vision 2020 strategy, focused around what it called selective consolidation in Europe, and was a “unique strategic opportunity to acquire an established flexibles platform in the European polythene films market with strong market positions”.

Other factors included an entry into an adjacent polymer-consuming market “and increasing the range of polymer conversion technologies within RPC, in line with other global players”, plus an opportunity to pursue what it called a “parallel buy-and-build strategy in flexibles alongside RPC's existing strategy in rigids”.

The deal would also enhance the group's longer term overall polymer purchasing position, as well as creating an enlarged platform to generate cost, purchasing and efficiency savings.