Rigid plastic packaging producer RPC Group (Higham Ferrers, Rushden / UK; www.rpc-group.com) is on a buying spree again, part of its drive to expand outside Europe, one of the key pillars of its “Vision 2020” strategy. In its sixth acquisition since the end of September last year, the British group has its sights set on US family-owned packaging materials producer Letica Group (Rochester Hills, Michigan; www.letica.com), which it has offered to buy for around USD 640 (GBP 511m) on a cash-free, debt-free basis. The transaction will be financed by a 1-4 rights issue. For all of the companies it has acquired or agreed to do so, RPC calculates an aggregate enterprise value of about GBP 460m and an upfront consideration of around GBP 850m.

A leading North American manufacturer and distributor of rigid plastic packaging and foodservice products for the building and construction, foodservice, food, chemical and retail end markets, Letica has 1,750 employees and 13 manufacturing plants in 11 US states. It employs a wide range of production processes based on injection moulding, thermoforming, paper forming and sheet extrusion. The packaging producer also has its own in-house design centre claimed to have high-quality printing, decorating and labelling.

Under the terms of its latest acquisition, RPC will pay USD 490m upfront, plus an additional consideration of up to USD 150m after two years if the acquired company meets certain core earnings targets. In 2016, the US packaging producer reported sales of UD 450m and adjusted EBITDA of USD 57m. RPC said it expects to realise pre-tax cost savings of about USD 5m from the deal, before integration, within the second full year of ownership. Letica’s management has identified synergies worth about USD 12m. The range of “planned optimisation programmes” includes adjustment of employee benefits to market terms, enhanced selling strategies and improvement of general and administrative expenses as well as manufacturing efficiencies.

To facilitate the transition of commercial relationships, RPC said Letica's president and CEO, Anton Letica, and Mara Letica, vice president of operations and general counsel, have agreed to remain with the business until at least the end of the current financial reporting period. Going forward, Letica will operate as a standalone business unit within the RPC Superfos division.

Commenting on the latest deal, Pim Vervaat, RPC’s chief executive, said the acquisition provides a unique opportunity to further extend his group’s geographical reach into the attractive North American market through Letica's strong and well-invested manufacturing footprint. The transaction is not subject to shareholder approval; however it must pass US regulatory scrutiny. Closing is targeted for the end of March.