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UPDATE 1-Britain's RPC Group to buy U.S.-based Letica for up to $640 mln
February 9, 2017 / 10:48 AM / 8 months ago

UPDATE 1-Britain's RPC Group to buy U.S.-based Letica for up to $640 mln

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Feb 9 (Reuters) - British packaging company RPC Group Plc said on Thursday it would acquire Letica Group, a U.S.-based maker of plastic food-packaging products, for up to $640 million to expand outside Europe.

RPC shares fell as much as 5.9 percent to 997 pence by 1045 GMT on the London Stock Exchange, after earlier rising as much as 3 percent.

The deal comes at a time when the European plastic packaging industry is undergoing a consolidation to better compete with glass, plastic and aluminium-based packaging products.

RPC has signed six deals since September for a net consideration of about 850 million pounds ($1.07 billion), including the Letica deal, and reported in November a 53 percent rise in its first-half revenue, helped by the acquisitions.

RPC said it expected to record pretax cost savings of about $5 million within the second full year of ownership, and that Letica management had identified synergies worth about $12 million.

UBS, Jefferies and Panmure Gordon analysts reiterated their “buy” rating, while Numis reaffirmed its “add” rating.

RPC will pay $490 million upfront, and an additional consideration of up to $150 million will be payable after Letica meets certain core earnings targets over a two-year period, it said in a statement.

RPC also said it would raise gross proceeds of about 552 million pounds through a 1-for-4 rights issue to finance the deal. ($1 = 0.7961 pounds) (Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Gopakumar Warrier and Amrutha Gayathri)

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