Benelux's packaging firms playing hard to get with PE

Greg Gille
27 April 2017

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Thwarted take-private bids from PE houses for packaging companies have led to a drop in aggregate deal value in the Benelux region. Gregoire Gille reports

Recent attempts by private equity houses to source Benelux-based packaging businesses on the public markets have been thwarted, depriving the market of high-profile deals in the large-cap space.

Most recently, PAI Partners' non-binding €1.4bn takeover proposal of Refresco Gerber was rejected by the Dutch soft drink and fruit juice bottler in mid-April. PAI initially made an offer to acquire all 81.2 million issued shares in the company, amounting to €1.4bn. However, the board members of the company reviewed the proposed terms and conditions and did not accept the offer.

Refresco is a bottler of soft drinks and fruit juices, for brands such as Innocent, Um Bongo and Just Juice. In 2016, the company had revenues of approximately €2.1bn. It was founded in 1820 and is headquartered in Rotterdam, employing around 5,500 people in Europe and the US.

Benelux activity was dominated by small-cap and lower-mid-market deals in 2016

In 2010, 3i acquired a 20% stake in the Dutch beverage packaging manufacturer in an expansion deal valued at €84m. This was the second time 3i had invested in Refresco: the firm acquired a stake in the company in October 2003 during a management buyout of Refresco Holding from a syndicate of private equity investors comprising Hay Hill Capital, NeSBIC, Livingbridge, CBG Commerzbank and Capiton. The deal was then valued at €310m. In 2006, 3i sold its stake in Refresco to FL Group, Vifilfell and Kaupthing in a deal valued at €535m.

Refresco's share price rose sharply following PAI's initial move – it has dipped in the wake of the company board's decision but still remained well above its historical average at the time of writing. The business currently has a market cap of €1.43bn.

While PAI has met resistance from its target's board, Bain Capital had to contend with external interference for its planned buyout of Resilux, and chose to call it a day. In late March, the GP announced it would not proceed with its takeover offer for the listed Belgian packaging company following a German anti-trust authority ruling.

Second thoughts
Bain initially announced its intention to acquire all shares in Resilux in early February. In a statement released on 28 March, Resilux acknowledged that the offer would be dropped: "Resilux notes, as set out in Bain Capital's press release of 28 March 2017, that Bain Capital has made the decision not to proceed with a public tender offer for all shares and warrants issued by Resilux because Bain Capital has been notified by the German anti-trust authority that the intended combined acquisition of Resilux and Petainer has not received clearance in Phase I and would need to proceed to a Phase II review, which would make such combined acquisition difficult to pursue in the context of the required timeline for a delisting process of Resilux."

In its own statement, Bain pointed out that this was not a reflection on the attractiveness of Resilux, nor the result of adverse due diligence findings.

Based in Belgium, Resilux produces and sells polyethylene terephthalate (PET) packaging in the form of preforms and bottles. Its products are used to package water, soft drinks and a range of other liquid food products. It generated revenues of €296m in 2016, with a net income of €59.69m.

Resilux shares had risen sharply following Bain's planned offer in February, reaching a high of €190 (Bain's offer proposed €195 per share, valuing the business at around €380m). The share price tumbled following the 28 March announcement, trading at €159.45 at the time of writing.

Swing and a miss
Had they been successful, the take-privates of Refresco and Resilux would have helped spur activity at the larger end of the market in the Benelux region. Overall, Benelux activity was still dominated by small-cap and lower-mid-market deals in 2016, according to unquote" data, with a total of 23 buyouts within the €50-250m range, 18 between €25-50m, and 20 for small buyouts valued between €5-25m. This helps explain why aggregate value recorded such a dive year-on-year: buyouts were valued at a collective €7.8bn in 2016 against €16.6bn in 2015, and deals hit an average value of €112m in 2016 compared to €241m the previous year.

Four months into 2017 and with the Resilux and Refresco deals both off the table for now, it does not look like this picture is about to change significantly: unquote" recorded just one buyout valued in excess of €250m in the region in each of the first two quarters.