SOUTH AFRICA – Master Plastics, South Africa’s packaging group has received higher buyout offer from its private-equity suitors after facing resistance from a prominent shareholder.
According to Business Day report, MCGF II Partnership and MCGF II Investments, which initially offered Master Plastics shareholders 200c per share, confirmed that they would table a higher offer of 220c.
A notice to shareholders indicate that the new offer was made after talks with significant minority shareholder, Prudential Investment Managers, who had earlier registered disappointment with the 200c share offer.
According to Prudential, the initial offer did not reflect prospects for Master Plastics’ operation particularly PlusNet-Geotex which manufactures agricultural nets for “undercover farming”.
The implication of the new offer is that the buyout scheme will probably receive shareholders’ approval, with the quantum of irrevocable undertakings now looking more compelling.
The major irrevocable undertakings came from Lereko Metier Capital Growth Fund Trust and the LMCGF Parallel Trust I, Prudential and Steyn Capital Management.
Master Plastics said the revised offer was a significant premium of 19% to the company’s closing share price of 185c on November 28.
The group’s listing through Astrapak was short-lived after recommendations from its private equity suitors saw a successful delisting in 2017.
According to the private equity suitors, delisting would improve Master Plastics’ access to capital as a strategy of developing its regional expansion plans.
They also believed that as an unlisted entity Master Plastics would enjoy greater manoeuvrability to access further capital projects and acquisitions in attractive growth niches to build scale and diversification.
As part of its expansion plan, Master Plastics acquired the Business of Mapflex in October this year.
In September, the group indicated that it had been impacted by the after-effects of the deadly listeriosis outbreak and the drought in the Western Cape.
The group reported EBITDA of US$2.03 million and headline earnings per share of 12.2c in the half year to February 2018.
Apart from the PlusNet-Geotex business, Master Plastics comprises Cape Town-based bag maker Peninsula Packaging and Durban-based Barrier Film Converters.
The company manufactures and provides various products and solutions to customers operating in the agricultural, food, produce, dairy and general industrial markets.