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The independent directors behind one of Australia’s largest packaging companies, Pact Group Holdings (ASX: PGH), have today urged shareholders to reject an ‘opportunistic’ $234 million offer from Geminder family-owned investment company Kin Group.
The bid, which was initially lobbed one month ago, would allow Kin Group to take control of the remaining 50 per cent stake in PGH it does not own. The company was co-founded by Kin Group chairman Ruffy Geminder and his wife Fiona - the daughter of late cardboard king Richard Pratt - in 2002.
In a statement released on the ASX today, Pact Group said the offer was made at a time when shares were trading ‘at the low end of the range…over the five years leading up to the date of the offer’.
The bid also represents a 4 per cent discount to the volume weighted average trading price per Pact share from when the offer was announced on 13 September to 11 October.
“The Independent Expert has concluded that the offer of 68c per Pact Share is neither fair nor reasonable and is below the Independent Expert’s estimated value of a Pact Share of $1.06 to $1.51,” Pact Group said in an ASX statement.
“The timing of the offer is opportunistic.”
The Independent Board Committee (IBC) that recommended against the deal is made up of Michael Wachtel and Carmen Chua, who both sit on Pact Group’s board of directors.
“The Independent Board Committee unanimously recommends that you reject the offer,” today’s announcement to the ASX said.
Founded in 2002, Pact Group specialises in the manufacture and supply of rigid plastic and metal packaging, materials handling and pooling solutions, contract manufacturing services, recycling and sustainability services.
For the first quarter of FY24, the group reported $473 million in revenue, reflecting a 3 per cent drop year-on-year due to ‘sluggish demand’ in the packaging and sustainability sector.
Underlying EBIDTA for the period came in at $63.2 million, in line with last year as the impact of lower revenues has been offset by improved margins from the benefit of lower resin and other material costs.
The group is yet to incur any material benefits from its transformation initiatives in the first quarter of FY24, which involved the $160 million sale of half of its Crate Pooling business in a joint venture with global infrastructure investment manager Morrison & Co last month.
At the time the offer was announced, Kin Group described the target as ‘a smaller business with a reduced earnings base and faces a challenging environment, with supply chain disruptions, inflationary pressures, fluctuating resin prices, labour constraints and macroeconomic uncertainty’.
In its bidder’s statement, Kin Group has advised of its intention to delist Pact from ASX “as soon as it is able to do so”.
If Kin Group does not reach the 90 per cent compulsory acquisition level, delisting from the ASX will be subject to a number of safeguards.
The group’s offer is scheduled to close on 8 November.
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