The Pact Group Holdings Ltd (ASX: PGH) share price is up 6% after the packaging business received a takeover offer.
Pact describes itself as a “global leader in circular and sustainable packaging, reuse and recycling solutions.”
Pact Group Holdings share price
Takeover offer for Pact
Kin Group has announced its intention to make an unconditional A$0.68 cash per share offer to buy the whole of the Pact business.
Kin said that the offer would provide shareholders with “liquidity and certainty of an unconditional, all-cash offer at a price above Pact’s share price of A$0.675 per share at the close of trading on 12 September 2023, and allows shareholders to avoid any further risk associated with their Pact investment.”
The bidder already owns more than 50% of Pact, so that makes the prospect of a competing offer appearing “highly unlikely”.
Why does Kin want to take Pact private? It said that success for Pact is “best achieved under private ownership without the additional costs, market volatility and complexities of being an ASX-listed company.” It intends to delist Pact as soon as it’s able to do so.
Pact response
Pact said that its board of directors is “not yet in a position to make a formal recommendation to shareholders in relation to the bid.”
The board said that until the board has issued its formal recommendation regarding the offer, shareholders were advised to take no action in relation to this offer, though the market seems excited, with the Pact’s share price rise.
Kin Group’s Chairman, Raphael Geminder, who is also the chairman of Pact, has advised the board of his conflict of interest regarding this offer, so has recused himself from the board and committee consideration of the offer, for the duration of this offer period.
Michael Wachtel, the lead independent director, will chair the relevant board and subcommittee meetings.
Pact’s board will appoint independent advisers and advise the market “in due course.”
Final thoughts on the Pact share price
It’s interesting that Kin has gone with a low offer compared to where the Pact share price has been recently – normally a takeover offer requires a sizeable premium.
I’m curious to see how this progresses. If I were a shareholder, I’d want to hold on to see if there’s a stronger bid or if Pact can demonstrate a bit of an operational recovery.
