US packaging giant Graphic Packaging's $60 million deal to acquire ASX-listed Australasian folding carton producer Colorpak has provoked a strong stock market response.
US packaging giant Graphic Packaging's $60 million deal to acquire ASX-listed Australasian folding carton producer Colorpak has provoked a strong stock market response.
The companies have entered into a Scheme Implementation Deed after Atlanta-based Graphic Packaging International offered 68 cents for each Colorpak share. Colorpak shares jumped 30 per cent on the ASX after the takeover bid was announced, closing 16 cents higher at 70 cents. Colorpak's founding Commins family, which holds 32% of total issued shares, has indicated it will vote in favour of the agreement, subject to no superior proposal being recommended by the board, and the deal expected to be completed in April.
Colorpak would then de-list from the Australian Stock Exchange and become a subsidiary of Graphic, which is listed on the New York Stock Exchange.
The Colorpak board, which includes a chairman and three non-executive directors, would be dissolved but the entire management team, including CEO Alex Commins, would stay on to run the local operation.
“We’re very excited at the prospect of working with a US company that has a market capitalisation of $4 billion,” Commins told Print21. “They have growth ambitions in the region and will support us by investing in new technology. They have lots of different products, lots of expertise in the global food and beverage sector, and we will be able to share that expertise. If all goes according to plan, the deal should be signed mid-April.”
“The acquisition of Colorpak is a logical progression from our long term strategic partnership,” said Graphic Packaging chairman David Scheible. “Colorpak and Graphic Packaging have partnered to provide unique packaging solutions in Australia and New Zealand for close to a decade. This acquisition combines Colorpak’s leading folding carton capabilities with Graphic Packaging’s global expertise and will enhance our ability to serve all customers in this market. Colorpak is a market leader in revenue and reputation which makes it an exciting opportunity for Graphic Packaging to consolidate its position and grow its presence in the Australia and New Zealand folding carton market."
Colorpak’s directors have unanimously recommended that shareholders vote in favour of the deal. Colorpak chairman, Geoff Willis said: “Colorpak’s board considers the proposal highlights the strategic value of our business and provides an opportunity for our shareholders to realise the value of their holdings at an attractive price.”
Details of the offer include:
- Colorpak shareholders to receive cash payments of $0.68 per share including a cash payment of $0.57 from Graphic Packaging plus up to $0.11 franked dividends per share from Colorpak.
- Shareholders able to fully utilize franking credits receive value of up to $0.727 per share.
- Cash payments of $0.68 per share represents a premium of:
- 25.9% to Colorpak’s closing share price yesterday;
- 26.5% premium to the 30 day volume weighted average price (VWAP); and
- 31.5% premium to the 90 day VWAP