Packaging firm rocked by takeover troubles MARKET REPORT
Packaging company RPC went into reverse as investors began to lose faith that its private equity suitors would make a bid.
Major buyout houses apollo and Bain capital were likely to either table an offer or throw in the towel after the market close.
But just before the 5pm deadline struck, RPc said it had asked for the Panel on Takeovers and Mergers to extend the cut-off point.
in a statement to the market it said discussions ‘remain ongoing’ with apollo and Bain. The two potential bidders have until november 5 to confirm whether or not they will make a formal offer.
Plastics specialist RPc had soared last month when it revealed it was in separate takeover talks with both Bain and apollo. On the day it notified the market of their interest, shares shot up 17.6pc.
But yesterday they fell 4.2pc, or 34p, to 779.6p, reflecting shareholders’ disappointment they might not be able to cash in on a buyout.
RPc also released a trading update as the markets closed for the day, which showed revenues hit £1.9bn in the first half of the year. investors had been relying on it to deliver revenue growth, excluding the benefit from newly acquired businesses, of around 3pc. RPc confirmed growth was ‘around’ this figure.
Shareholders also wanted to see that RPc was making progress in integrating the smaller businesses it had bought after incurring hefty exceptional costs in buying them.
There were worries that RPc’s ‘successful acquisition programme is actually just masking a poor operating performance, artificially boosting revenues at the expense of profit’, said Hargreaves Lansdown analyst nicholas Hyett. His colleague george Salmon added that it was particularly important for RPc to get its business in order ‘given the political heat facing plastic packaging’.
The business said it was benefiting from the acquisition of Plasgran, which creates recycled materials, as these are becoming increasingly popular, but it gave no further details.
TI Fluid Systems, a FTSE 250 company which develops mechanisms to push fluid around cars, left its board and analysts scratching their heads as it became the index’s biggest loser.
The group sank a sizeable 10.5pc, or 25.2p, to 214.8p, even though it released no news, was not mentioned in the day’s broker notes and no unusually large trades occurred.
it was a mostly negative day for the FTSE 100 too, which ended the day down 1.2pc, or 85.21 points, at 7233.33. Melrose Industries, the turnaround investor which recently bought components manufacturer gkn, slipped the most amid an investor flight from the engineering sector. it sank 5.5pc, or 10.45p, to 181.3p.
Fund manager neil Woodford, who has run into criticism over the past year for his lacklustre performance, had a day of ups and downs. Hvivo, a company which helps drugs businesses discover cures for infectious diseases in which Woodford has built a 29.1pc stake, announced it had won two contracts with a global biopharmaceutical company.
Hvivo will allow the unnamed firm to study the lifecycle of a particular cold-like virus in humans. Shares went up 8.5pc, or 5p, to 63.5p.
But iP group, in which Woodford has a 19.9pc stake, had worse news. The company, which helps turn ideas founded in universities into businesses, owns a majority stake in pharmaceutical company
Diurnal, which plummeted 57pc, or 61p, to 46.5p after announcing a drug chronocort had not passed late- stage trials. The drug is designed to treat congenital adrenal hyperplasia, a disease caused by a deficiency of the hormone cortisol which may stunt growth.