Rpc Group Share News (RPC)

(ShareCast News) - RPC Group is to buy US plastics manufacturer Letica Group for up to £511m ($640m), the latest acquisition for the plastics engineering firm as it bids to expand in its reach outside Europe.The acquisition, subject to approval from the US Federal Trade Commission and the Depart of Justice, is expected to complete by the end of March, which it intends to fund by raising £552m through a fully underwritten rights issue.The FTSE 250 company will pay £391m ($490m) up-front on a cash- and debt-free basis, with an additional £120m ($150m) paid subject to Letica achieving earnings before interest, tax, depreciation and amortisation (EBITDA) greater than $140m and up to $201m over the two-year period starting on 1 July.The £391m amount represents a multiple of 8.5 times Letica's adjusted EBITDA for the year ended 30 June 2016 and if the full additional earn-out payment is made, the amount will represent 6.4 times Letica's average adjusted EBITDA over the same period.The company believes that the acquisition would help it "create a meaningful presence outside of Europe", which is one of the key pillars to RPC's 'Vision 2020' strategy, and provide it with a complementary platform from which to make future growth investments in North America.Letica, which reported profit before tax of $27m in the year to last June, is expected to deliver pre-tax cost synergies of at least $5m per year, before integration costs, to be met within the second full financial year of ownership.PRC chief executive Pim Vervaat said: "Letica represents an excellent opportunity in the context of the group's growth strategy to create a meaningful presence outside of Europe. The acquisition of Letica provides a unique opportunity to further extend RPC's geographical reach into the attractive North American market through Letica's strong and well-invested manufacturing footprint."We are excited to be able to develop an enhanced platform of scale to support continued organic and inorganic growth in the US."Since September 2016, RPC has bought, or has agreed to buy, six companies as part of its growth strategy.To fund these acquisitions and the acquisition of Letica the rights issue will allow RPC to repay amounts drawn under its existing debt facilities following the completion of the other acquisitions to target a leverage of about 2.1 times net debt to EBITDA.The rights issue will be on the basis of one new share for every four existing shares at a price of 665p each.