Shares in polythene film specialist British Polythene Industries (BPI) soar 32% to 954.5p after plastics products firm RPC (RPC) announces a surprise cash and share takeover, valuing it at £261 million.
RPC will pay BPI shareholders 470p per share in cash plus six new RPC shares for every 10 BPI shares they own.
The total value of the deal will be around 940p per share, a 30% premium to BPI’s closing price of 725p on 8 June.
RPC, whose shares rise 2.1% to 832.5p, says the deal is in line with its strategy to consolidate European markets and offers an opportunity to enter the polythene film industry through an established platform.
The deal will be accretive to RPC's earnings per share within the first full financial year and ‘materially’ accretive in year two when synergies kick in.
It is the fifth deal worth more than £100 million that RPC has made since December 2013. In March it completed the £470 million takeover of French bottle-top maker Global Closure Systems, which followed its acquisitions of Maynard & Harris, Ace and Promens.
The BPI deal offers a new market outside RPC’s core businesses of personal care bottles, coffee capsules, vending cups and plastic moulds.
Recent acquisitions helped RPC grow revenues by 34% in the year to 31 March, with a 35% increase in pre-tax profit. It has been very successful in driving synergies from deals, for example doubling its synergy target for Promens to €30 million.
BPI saw better-than-expected trading in the first quarter after benefitting from lower energy costs and favourable foreign exchange rates.
