rpc group plc/media/files/r/rpc-group/documents/... · rpc group plc proposed acquisition ... the...

RPC Group Plc

Proposed Acquisition of Promens

RPC GROUP PLC Proposed Acquisition of Promens

27 November 2014

Processor of

the Year

Company of

the Year

Bringing Packaging to Life

RPC Group Plc


DISCLAIMER IMPORTANT NOTICE

THIS DOCUMENT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION IN AND MAY NOT BE TAKEN OR TRANSMITTED INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA OR SOUTH AFRICA AND MAY NOT BE COPIED, FORWARDED, DISTRIBUTED OR TRANSMITTED IN OR INTO THE UNITED STATES OF AMERICA, CANADA, JAPAN, AUSTRALIA OR REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL. THE DISTRIBUTION OF THIS DOCUMENT IN ANY OTHER JURISDICTIONS MAY BE RESTRICTED BY LAW AND PERSONS INTO WHOSE POSSESSION THIS DOCUMENT COMES SHOULD INFORM THEMSELVES ABOUT, AND OBSERVE ANY SUCH RESTRICTIONS. ANY FAILURE TO COMPLY WITH SUCH RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE LAWS OF THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR ANY OTHER SUCH JURISDICTION. BY ACCEPTING THIS DOCUMENT, YOU AGREE TO BE BOUND BY THESE RESTRICTIONS.

This presentation comprises the written materials/slides for a presentation concerning the proposed acquisition of Promens Group AS and rights issue (the "Transaction") by RPC Group Plc (“RPC” or the "Company"). The following applies to the presentation materials following this page, the oral presentation of the slides by the Company, the question-and-answer session that follows that oral presentation, hard copies of this document and any materials distributed at, or in connection with, this presentation. You are therefore advised to read this carefully before reading, accessing or making any other use of the presentation materials.

This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company or securities in any other entity nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. This presentation is not a prospectus and prospective purchasers of securities should not subscribe for any securities referred to in this presentation except on the basis of information in the combined circular and prospectus expected to be published by the Company on or around 27 November 2014 (the "Prospectus"). The Prospectus will include a description of risk factors in relation to the Transaction and an investment in the Company. Copies of the Prospectus will, following publication, be available from the Company at its registered office.

The information contained herein is for discussion purposes only and does not purport to contain all information that may be required to evaluate the Transaction, the Company and/or its financial position. No reliance may be placed for any purposes whatsoever on the information contained in this presentation or on its completeness. The contents of this presentation have not been verified by the Company or N M Rothschild & Sons Limited ("Rothschild"), Deutsche Bank AG, London Branch ("Deutsche Bank"), Panmure Gordon (UK) Limited ("Panmure") and HSBC Bank Plc ("HSBC") (together, the "Banks"). No representation or warranty, express or implied, is given by or on behalf of the Company or the Banks or any of such persons’ directors, officers or employees or any other person as to the accuracy, completeness or verification of the information or the opinions contained in this presentation and no liability is accepted by the Company or the Banks or any of such persons members, directors, officers or employees nor any other person for any loss arising, directly or indirectly from any use of such information or opinions or otherwise.

To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. The Company has not independently verified the data contained herein and there is no guarantee of the accuracy or completeness of such data. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the markets in which the Company operates. While the Company believes, acting in good faith, that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly, prospective purchasers of securities should not place reliance on any of the industry, market or competitive position data contained in this presentation.

This presentation contains forward-looking statements that involve substantial risks and uncertainties and actual results and developments may differ materially from those expressed or implied by these statements or whether as a result of new information, future events or results or otherwise. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. The words “believe”, “expect”, “anticipate”, “intends”, “estimate”, “forecast”, “project”, “will”, “may”, “should” and similar expressions identify forward-looking statements. Others can be identified from the context in which they are made. These forward-looking statements are subject to risks, uncertainties, estimates, assumptions and other factors about the Company and its subsidiaries and investments, including those described in the risk factors section of the Prospectus. These forward looking statements speak only as of the date of this presentation. No statement in this presentation is intended to be nor may be construed as a profit forecast.

Rothschild, Deutsche Bank and HSBC, who are each authorised by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority ("FCA") in the United Kingdom, and Panmure, which is authorised and regulated by the FCA in the United Kingdom, are advising the Company and no one else in connection with the Transaction and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients. Prospective purchasers of securities of the Company are required to make their own independent investigation and appraisal of the business and financial condition of the Company and the nature of the securities of the Company and should make all trading and investment decisions in reliance on their own judgement and not in reliance on any of the Banks. None of the Banks is providing any such persons with advice on the suitability of the matters set out in this presentation or otherwise providing them with any investment advice or personal recommendations regarding any securities of the Company. Any presentations, research or other information communicated or otherwise made available in this presentation is incidental to the provision of services by the Banks to the Company and is not based on individual circumstances. Attendees of this presentation should seek their own independent legal, investment and tax advice as they see fit.

This presentation is only addressed and directed at persons in member states of the European Economic Area who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) ("Qualified Investors"). Within the United Kingdom, this presentation is directed only at persons in the United Kingdom who (i) are Qualified Investors and (ii) have professional experience in matters relating to investments and/or to high net worth companies falling within Articles 19(5) or 49(2) respectively of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (or persons to whom it may otherwise be lawfully communicated) and, if permitted by applicable law, is supplied outside the United Kingdom to professionals or institutions whose ordinary business involves them engaging in investment activities ("relevant persons"). The information contained in this presentation is not intended to be viewed by, or distributed or passed on (directly or indirectly) to, and should not be acted upon by any other class of persons. By attending or accessing this presentation, you will be taken to have represented, warranted and undertaken to the Company and the Banks that: (i) you are a Qualified Investor or a relevant person; and (ii) you have read and agree to comply with, and be bound by, the contents of this disclaimer.

The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters (each as defined in the Prospectus) have not been and will not be registered under the United States Securities Act of 1933, as amended, or under the applicable securities laws of any state of the United States or any province or territory of Australia, Canada, Japan or the Republic of South Africa. Subject to certain exceptions, none of the Nil Paid rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters may be offered, sold, taken up, renounced or delivered, directly or indirectly, within Australia, Canada, Japan, the Republic of South Africa or the United States or in any country, territory or possession where to do so may contravene local securities laws or regulations. The Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares and the Provisional Allotment Letters are being offered and sold outside the United States only in offshore transactions within the meaning of and in accordance with Regulation S under the Securities Act. There will be no public offer of the Nil Paid Rights, the Fully Paid Rights, the New Ordinary Shares or the Provisional Allotment Letters in the United States.

RPC Group Plc

Proposed Acquisition of Promens 3

● Consideration of €386m (c. £307m1), cash-free and debt-free

− Multiple of 6.8x December 2013 EBITDA2 of €57m (£45m1)

● Leading European manufacturer of rigid plastic products

● Combination offers substantial strategic and financial benefits

− Strengthening selected market positions in core European end markets

− Extending geographical reach

− Adding niche technologies

− Enhancing scale in European polymer buying

● In line with Vision 2020, building on successful acquisition history

● Meets RPC’s strict acquisition criteria

● EPS accretive in the first full year, Promens’ ROCE3 ahead of RPC’s WACC

● Estimated pre-tax cost synergies of at least €15m per annum fully realisable by year three

● Fully underwritten rights issue of c. £200m4

● Part utilisation of existing RCF which will increase from £350m to £490m

● Expected opening leverage of c. 2.0x net debt / EBITDA1 as at 31 March 2015

Notes

1. FX rate: £1 = €1.26

2. Excluding non-recurring items

3. Inclusive of estimated synergies

4. Net proceeds of c. £195m after expenses

Strategic

rationale

Transaction

Financing

TRANSACTION OVERVIEW A COMPELLING STRATEGIC ACQUISITION IN LINE WITH OUR VISION 2020

RPC Group Plc


Diversified European base:

2013 Sales by origin

Multi-technology:

2013 Sales by technology

● BM = Blow moulding

● IM = Injection moulding

● RM = Rotational moulding

● TF = Thermoforming

● Other technologies comprise vacuum forming, reaction

injection moulding (“RIM”) and expanded polystyrene

(“EPS”)

Business overview:

● Diversified across a broad range of

products and end markets, primarily

within Europe

● 2013 sales were €582m with EBITDA1 of

€57m

● Broad customer portfolio with largest

customer less than 5% of sales

● Strong long-term relationships with key

customers (blue chip, multi-national and

regional)

● Operates through 40 production facilities

that span 20 countries across Europe,

North America, Asia and Africa

● Employs c. 3,800 people

● In addition RPC has a DKK 1 call option

on Promens’ Medical SBU

4

BM37%

IM27%

RM17%

TF12%

Other7%

Source Management information

PROMENS BUSINESS OVERVIEW DIVERSIFIED RIGID PLASTIC PACKAGING AND COMPONENTS PLAYER

Note


UK11%

Other W. Europe45%

Nordic24%

E. Europe10%

S. Europe3%

Americas2%

Africa<1%

Asia4%

RPC Group Plc


27%

21%19%

17%

16%

5

Source Management information

Note

1. Segment sales stated pre corporate adjustments, group sales include net corporate adjustments of €4.8m

Rotational

Moulding Group

Share of sales FY 2013

€582m1

Solutions / end markets

Technologies

Personal &

Healthcare

• Blow moulding

• Injection moulding

Vehicles


• Reaction injection moulding

• Vacuum forming

Chemical

€158m

11 plants in 6 countries

• Bulk and specialty chemicals

• Lubricants

• Coatings

• Fragrances

• Agrichemicals markets

• Blow moulding


• Vacuum blow moulding

• Rotational moulding

• EPS

Food &

Beverage

• Blow moulding


• Thermoforming

Sample products

€121m


€115m


€101m


€93m


Personal care sub-segments in

Europe

• Prestige

• Masstige

• Mass market

Niche products for the global

pharma markets

• Fresh foods

• Chilled foods

• Dairy

• Liquids

All plants in the Nordic region

• Insulated tubs and bulky

containers for the fishing,

chemical and food industries

• Fuel tanks for public service,

construction & marine

vehicles

• Interior and exterior

components for trucks

PROMENS BUSINESS OVERVIEW EXPOSURE TO ATTRACTIVE END MARKETS AND NICHE TECHNOLOGIES

http://packaging.promens.com/promens/accueil.aspx?site=PACKC&lang=EN&page=ACCUEIL&resetMarket=true

RPC Group Plc


Current trading year-to-date

● Trading satisfactory

● Good operational progress continuing

− Focused investments in emerging markets and project

developments impacting 2014 YTD

● Temporary project delays and volume compression

− Partially offset by reduced polymer prices as well as operational

and cost efficiencies

● Good product development pipeline

Financial development of the Group (€m, y/e Dec)

● Business recovered from 2010 performance to deliver a consistent

robust performance

● Gearing up during 2014 for future growth

Notes

1. Financials based on continuing operations, excluding non-recurring items

2. 2011 results inclusive of small passenger car components business subsequently closed, 2010 results based on Promens’ management information

PROMENS BUSINESS OVERVIEW PROMENS FINANCIALS AND CURRENT TRADING YEAR-TO-DATE

€m YTD SEP 13 YTD SEP 14

Revenues 441.6 436.8

EBITDA1 45.1 40.6

EBITDA margin 10.2% 9.3%

529

595 581 582

9.5% 9.7%

10.1%9.8%

8%

9%

10%

11%

12%

-

100

200

300

400

500

600

700

2010A 2011A 2012A 2013A

Sales EBITDA margin

RPC Group Plc


GROUP STRATEGY AND ACQUISITION RATIONALE COMPELLING STRATEGIC FIT

● Consolidation in the UK and Scandinavian end markets

● Enhancing presence in personal care and chemicals

● Establishing manufacturing presence in Canada, India, the Czech Republic, Estonia and Russia

● Enhancing presence in China with two additional sites (Hefei1 and Taicang)

● Growing presence in Africa with an additional Tunisian manufacturing site

● RPC currently buys circa 325kt of polymer, mainly Western Europe

● Promens buys circa 120kt of polymer, mainly Western Europe

● The combined group’s polymer consumption will equate to c.4.5% of the total European output of

polymers for rigid plastic packaging

Note

1. Hefei not yet operational

Enhancing scale in

European polymer

buying

● One of the world’s leading rotational moulders

● Vacuum forming

● Reaction injection moulding and EPS

Adding niche

technologies

Extending geographical

reach

Strengthening selected

market positions in core

European end markets

RPC Group Plc


GROUP STRATEGY AND ACQUISITION RATIONALE CLEAR SYNERGISTIC OPPORTUNITIES

8

Estimated ongoing pre-tax cost synergies of at least €15m per annum fully

realisable within the first three full years

● Half of annual cost synergies expected to be achieved in year one

Synergy opportunities

● Strategically strengthened polymer buying position

● Elimination of duplicate overheads

● Opportunities for production optimisation and site rationalisation

− Significant overlap in European manufacturing footprints

− RPC has 46 production sites in Europe while Promens has 35

● Expected one-off cash costs of c. €35m mainly in years one and two

Cash synergies

● Working capital management

− Estimated at c. €10m; to be achieved within the first full year

● Capital expenditure efficiency

− Quantum and timing will be determined post transaction

Steady state pre-tax cost synergies of at least €15m

RPC sites Promens sites

Site overlap

RPC Group Plc


GROUP STRATEGY AND ACQUISITION RATIONALE CLEAR PATH TO INTEGRATION

9

Approach to integration

● Promens’ Packaging business will fit well within RPC’s structure

● Rotational Moulding and Vehicles to form a new cluster

● Polymer purchasing will be centrally coordinated immediately after completion

● RPC to complement own business improvement capability with dedicated specialists

Previous track record

● RPC has an excellent track record of integration and reorganisation

− Evidenced by the success of both the RPC 2010 and Fitter for the Future projects

− Previous track record of realising synergies on Superfos, M&H Plastics, Manuplastics and Helioplast

RPC Group Plc


GROUP STRATEGY AND ACQUISITION RATIONALE ACQUISITION CRITERIA & VISION 2020 FINANCIAL METRICS

10

Note

1. Includes €15m of pre-tax cost synergies

RPC acquisition criteria

● Strategic fit Clear acquisition rationale and strategy

● Strong incumbent management Strong management teams in place

● Financial track record Resilient profitability from diversified geographic and product

markets

● Financial criteria:

− ROCE > WACC of RPC Promens’ ROCE1 ahead of RPC’s WACC of c.9%

− Quantifiable synergies Purchasing, removal of overheads, optimisation of manufacturing

footprint

− Earnings accretion EPS accretive in first full year post acquisition

− Impact on Group KPIs See below

Vision 2020 financial metrics

● RONOA of at least 20% Promens RONOA of 25% in 20131

● Return on sales of at least 8% Promens return on sales of 8.7% in 20131

RPC Group Plc


● Promens acquired for €386m (£307m)1 on a cash-free, debt-free basis2

− RPC to assume Promens’ net pension deficit of €12.4m3

● £200m4,5 rights issue fully underwritten by Deutsche Bank, Panmure Gordon and HSBC

− Fundraising not conditional on completion of the acquisition

− 1 for 3 rights issue at 320p

− Discount to TERP (adjusted for the 2014/15 interim dividend): c. 34%

● Balance of funding drawn from increased 5-year RCF

− Increase in the facility to £490m from £350m to provide additional headroom

● Expected enlarged group opening leverage of c. 2.0x net debt / EBITDA6 as at 31 March 2015

Notes

1. FX rate: £1 = €1.26

2. Subject to customary adjustments

3. As at 31 December 2013

4. Net proceeds of c. £195m after expenses

5. Rights issue shares will not carry the right to the interim dividend for the year ended March 2015


TRANSACTION STRUCTURE AND TIMETABLE ACQUISITION FINANCING STRUCTURE

RPC Group Plc


TRANSACTION TIMETABLE

12

Note

1. Transaction expected to complete following French Works Councils’ consultation process, receipt of customary competition approvals and clearance from the Central Bank of Iceland

Expected timetable

Announcement of the Acquisition and Rights Issue 27 November 2014

Record Date for Rights Issue 15 December 2014

General Meeting to approve Rights Issue 17 December 2014

Admission and commencement of dealings in Nil Paid Rights, on the London Stock Exchange 18 December 2014

Deadline for acceptance of Rights Issue 7 January 2015

Commencement of dealing in New Ordinary Shares fully paid 8 January 2015

Expected date of completion of Acquisition By the end of March 20151

RPC Group Plc


SUPPLEMENTARY MATERIAL

13

RPC Group Plc


BUSINESS OVERVIEW PROMENS BUSINESS BUILT UP VIA A SERIES OF ACQUISITIONS

14

Majority of Promens

today is comprised of

Polimoon

1984

Saeplast founded

in Dalvick,

Iceland

2005

Bonar Plastics,

USA and

Europe

acquired

2006

Acquisitions of

Polimoon, EU

and Elkhart

Plastics, US

2010

US facilities

sold

Acquisition of

Marwin Plastic,

Germany

1996

Saeplast India

established

2002

Acquisition of

Icebox Plastico,

Spain

2004

Acquisition of

Tempra, Iceland

2008

Four units

consolidated

2012

Divestment of

French

passenger car

business

1999

Acquisition of

Dyno factories,

Norway &

Canada

2003

Acquisition of

Plasti-Ned,

Netherlands

2007

Acquisitions of

Novoplast,

Russia,

Decoplast,

France and STE,

Spain

2013

Opening of

Taicang, China

RPC Group Plc


a Chemical

● Serves some of the leading chemical companies and distributors in Europe

● Facilities in close proximity to relevant ports / clusters with high concentration of

chemical producers

● Northern and South-Western Germany, North-Western UK and Belgium

● RPC is currently a small player in this end market

Personal & Healthcare

● Attractively positioned with global and local consumer brands in Western and

Eastern Europe

● Track record of innovation

● Located in close proximity to customers’ centres of excellence and filling locations

in France

● Track record of growth in Eastern Europe

Food & Beverage

● Largely Scandinavian business

● Customer base comprises regional and local brands

Rotational Moulding

● Leading position in rotational moulding in Europe

● Rigid plastic components for primarily fishing, agricultural, and commercial

vehicles sectors

● Good footprint outside Europe

Vehicles

● Leading position in RIM technology for commercial vehicles industry

● Low-cost operation in Estonia supporting the value-adding product development

in Holland

Chemical Food & Beverage

Personal & Healthcare

Vehicles Rotational Moulding

PROMENS ACQUISITION RATIONALE EXTENSIVE EUROPEAN FOOTPRINT ACROSS SEVERAL END MARKETS

RPC Group Plc


Non-Europe Promens has attractive global presence in selected end

markets

● €36m of sales (6%) generated outside Europe in 2013

● Global Rotational Moulding business is supported through facilities in

China, India and Canada

● Personal & Healthcare operates facilities in Tunisia and Russia

● Currently establishing manufacturing base in China in Personal

Care segment

− Complementary to RPC’s Ace business

Personal & Healthcare Rotational Moulding

PROMENS ACQUISITION RATIONALE ATTRACTIVE MANUFACTURING PRESENCE OUTSIDE EUROPE

RPC Group Plc


PROMENS ACQUISITION RATIONALE MEDICAL BUSINESS UNIT CARVE-OUT AND CALL OPTION

17

● Pharmaceutical packaging business:

– Pharmaceutical packaging including intravenous bags and plastics vials

– Based in Langeskov, Denmark

– 2013 sales of €12m

– 88 employees

● Promens currently rebuilding base-load business with focus on more resilient product lines

● Business therefore carved out

● Business could potentially form an attractive addition to RPC’s existing pharmaceutical business

● RPC to be granted a call option at DKK 1, vesting at deal completion and lapsing 30 June 2015

rpc group plc/media/files/r/rpc-group/documents/... · rpc group plc proposed acquisition ... the...

Documents