Rpc Group Regulatory News (RPC)

15 December 2016

RPC Group Plc

Proposed Acquisition of Astrapak Limited

RPC Group Plc ("RPC"), a leading international design and engineering company of plastic products for both packaging and non-packaging markets, today announces its proposed acquisition of Astrapak Limited ("Astrapak" or the "Company") by way of a public offer. The consideration, based on an enterprise value of the operational assets being acquired by RPC of ZAR 1,370 million (£79 million)1 on a cash-free, debt-free basis, is equivalent to an enterprise value to underlying EBITDA FY16A multiple of approximately 6.3 times (the "Proposed Acquisition").

Listed on the Johannesburg Stock Exchange, Astrapak is a leading South African manufacturer of rigid plastic packaging products and components with a broad product offering across injection moulding, blowmoulding and thermoforming technology platforms. The Company serves industrial and consumer markets, supplying customers in Sub-Saharan Africa. Astrapak's manufacturing footprint comprises nine facilities in South Africa, employing approximately 1,100 people. For the year ended 28 February 2016, the Company achieved revenues of ZAR 1.4 billion (£81million)1. Robin Moore, Chief Executive Officer of Astrapak, will continue to lead the Astrapak business as a stand-alone sub-division within RPC Superfos.

RPC will fund the consideration through its existing debt facilities.

Highlights of the Proposed Acquisition

The Proposed Acquisition of Astrapak represents a strategic opportunity to acquire a rigid plastic packaging group of scale (a 'mini RPC'), with well-established market positions, in a new territory. The Proposed Acquisition represents an excellent fit with RPC's Vision 2020 objective to increase its manufacturing footprint outside Europe, and meets RPC's strict acquisition criteria. South Africa is becoming an increasingly important market and a combination with Astrapak will enable RPC to establish a platform for growth in Sub-Saharan Africa, strategically positioning RPC to expand further into selected high growth African markets. Astrapak's skill-set is highly complementary and Astrapak is expected to accelerate its progress with the support of the wider RPC Group.

The Proposed Acquisition represents an excellent strategic fit with RPC and offers significant benefits for the Group, including:

· Acquisition of a 'mini RPC' in South Africa with expertise across the three core conversion processes of blowmoulding, injection moulding and thermoforming.

· Extension of RPC's contact with a number of its existing major international customers.

· A scalable platform from which a further organic and buy-and-build strategy can be initiated.

· A strong position from which to serve the wider Sub-Saharan Africa region as demand for plastic packaging develops over the medium to longer term.

· Acquisition expected to be earnings accretive from year 1 with ROCE in excess of WACC, whilst RONOA and return on sales levels are expected to be ahead of the minimum hurdle levels of 20% and 8% respectively.

Pim Vervaat, Chief Executive of RPC, commented:

"The acquisition of Astrapak represents an important step in realising RPC's strategy to create a meaningful presence outside of Europe. Astrapak's strong market position in South Africa will complement and enhance RPC's existing operations in the region, an increasingly important territory for us, and also offers an exciting opportunity to develop a platform from which to serve the high growth Sub-Saharan African market. I look forward to working with Robin and the management team to take Astrapak to the next stage of its strategic development."

The Proposed Acquisition will be implemented via a Scheme of Arrangement.

The Proposed Acquisition is conditional upon obtaining certain regulatory approvals as well as the requisite approvals being obtained from Astrapak's ordinary and preference shareholders. Prior to this announcement, Astrapak has secured written irrevocable undertakings and letters of support from selected Astrapak shareholders, representing approximately 75% of Astrapak's issued ordinary share capital, confirming that they will vote in favour of all resolutions required to give effect to the transaction. The Proposed Acquisition is expected to complete in the first quarter of 2017.

Notes

1 Sterling and South African Rand conversions based on the exchange rate of £1 : ZAR17.26

Forward looking statements

This announcement contains (or may contain) certain forward looking statements with respect to certain of RPC's current expectations and projections about future events. These statements, which sometimes use words such as "anticipate", "believe", "intend", "estimate", "expect", "forecast", "project", "hope", "plan", "assume", "positioned", "will", "shall", "may", "aim", "predict", "should", "continue" and words of similar meaning and/or other similar expressions that are predictions of or indicate future events and/or future trends, reflect RPC's beliefs and expectations at the date of this announcement and involve a number of risks, uncertainties and assumptions that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward looking statement.

Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, neither RPC nor any of its affiliates assumes any responsibility or obligation to update publicly or review any of the forward looking statements contained herein. You should not place undue reliance on forward looking statements, which speak only as of the date of this announcement.

Disclaimer

Rothschild, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting solely for RPC in relation to the Proposed Acquisition and nobody else and will not be responsible to anyone other than RPC for providing the protections afforded to clients of Rothschild, nor for providing advice in relation to the Proposed Acquisition or any other matter referred to in this announcement. Apart from the responsibilities and liabilities, if any, which may be imposed upon Rothschild by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, Rothschild does not accept any responsibility whatsoever or makes any representation or warranty, express or implied, concerning the contents of this announcement, including its accuracy, completeness or verification, or concerning any other statement made or purported to be made by it, or on its behalf, in connection with RPC or the Proposed Acquisition, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Rothschild accordingly disclaims, to the fullest extent permitted by law, all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to herein) which each of them might otherwise have in respect of this announcement or any such statement.