Marc Hasenfuss Editor-at-large
Picture: ISTOCK
Picture: ISTOCK

Packaging group Master Plastics will attract a higher buyout offer from its private-equity suitors after facing resistance from a prominent shareholder.

On Friday, MCGF II Partnership and MCGF II Investments, which initially offered Master Plastics shareholders 200c per share, confirmed a higher offer of 220c would be tabled.

A notice to shareholders indicated that the higher offer was made after talks with significant minority shareholder Prudential Investment Managers, who had earlier registered disappointment with the 200c share offer.

Prudential reckoned the offer did not fully reflect prospects for Master Plastics operations, particularly PlusNet-Geotex which manufactures agricultural nets for "undercover farming".

The higher offer means the buyout scheme will probably be approved by shareholders, with the quantum of irrevocable undertakings now looking more compelling.

Master Plastics disclosed that about 93.4-million shares, or 79.4% of the issued shares, had undertaken irrevocably to support the buyout offer.

The major irrevocable undertakings came from Lereko Metier Capital Growth Fund Trust and the LMCGF Parallel Trust I with a 32.6% stake, Prudential with 15% and Steyn Capital Management with 11.3%.

Manley Diedloff, CEO of Master Plastics, will not sell his 10.72% stake in the company, and will be retained by MCGF to lead the senior management team.

The increased offer will cost the MCGF entities an additional R21m on top of  the original buyout sum of about R210m.

Master Plastics said the revised offer was a significant premium of 19% to the company’s closing share price of 185c on November 28.

Independent expert Nodus Capital TS also gave a fair and reasonable opinion on the original 200c offer, noting that this represented a premium of 60% to the volume weighted average price (VWAP) of Master Plastics shares for the 30 days before October 3. Nodus also argued the offer provided Master Plastics shareholders with the opportunity to trade out of an illiquid asset.

The listing of Master Plastics was a short-lived affair. The company initially formed part of Astrapak, and was unbundled to that company’s shareholders via a distribution in specie in May 2017.

The private equity suitors reckoned a delisting would improve Master Plastics’ access to capital to develop its strategic and regional growth plans.

They also believed that as an unlisted entity Master Plastics would enjoy greater manoeuvrability to access further capital projects and acquisitions in attractive growth niches to build scale and diversification.

Apart from the PlusNet-Geotex business, Master Plastics comprises Cape Town-based bag maker Peninsula Packaging and Durban-based Barrier Film Converters.

hasenfussm@tisoblackstar.co.za