Rich Lister angry over independent expert’s Pact valuation

Rich Lister Raphael Geminder’s Kin Group, which is attempting to buy out the other half of troubled packaging company Pact, has lashed out at an independent expert report which labelled the offer “neither fair nor reasonable”

Kin Group, in a second bidder’s statement, accused independent expert Kroll Australia of producing an unbalanced valuation of Pact which “has the potential to mislead”.

The would-be suitor also warned shareholders that the Middle East conflict and geopolitical instability would likely put further downward pressure on the broader sharemarket which had already fallen 4.1 per cent since the offer opened. It also said the subsequent rise in oil prices would flow through to higher resin costs for Pact, putting further pressure on margins for a business which makes plastic bottles and containers.

Kin Group managing director Nick Perkins told The Australian Financial Review on Wednesday the offer was the main reason Pact shares had not been sliding in the market turmoil.


Rich Lister Raphael Geminder launched a buyout offer for the rest of Pact Group in mid-September. Josh Robenstone

“Our bid is there sustaining the share price,” he said. It was hard for anyone to predict the specific flow-on effect onto resin prices, but they would inevitably be higher if oil prices remained elevated for an extended period. “To quantify that is difficult.”

Rich Lister Mr Geminder and his Kin Group in mid-September launched a 68¢-a-share bid for the remainder of Pact at a time when the stock was trading at 67.5¢. Kin Group owned 50.02 per cent of the company at the outset, and has only managed to advance to 50.38 per cent in a bid which is scheduled to close on November 8.

An independent board committee, led by director Michael Wachtel, on October 13 told shareholders to reject the 68¢ a share offer made by Mr Geminder because it was “neither fair nor reasonable”; Kroll valued the shares at between $1.06 and $1.51.

“Kin is concerned that the target’s statement is not balanced, is selective and has the potential to mislead,” Kin Group said on Wednesday.

Kin Group is annoyed that the Kroll report “makes prominent reference to a valuation based on a hypothetical scenario of an offshore packaging company” being able to acquire 100 per cent of Pact. But Pact already had over 50 per cent of the company and was not intending to sell.

The target’s statement and independent expert report did outline in fine print that a valuation range of 83¢ to $1.24 per share was appropriate for the minority stake owned by non-Kin shareholders, when a control premium was excluded.

Kin Group also said the risks to shareholders from holding out had not been properly outlined by Kroll. “There’s a disconnect really to where we are today,” Mr Perkins said.

“The target’s statement fails to appropriately caution shareholders of the prevailing macroeconomic uncertainty, risks and challenges facing Pact and that the Pact share price may fall after the offer closes,” the statement said.

Mr Geminder’s Kin Group has investments across retail, packaging and property, including a 20 per cent stake in discount retailer The Reject Shop, 66 per cent of Pro-Pac Packaging, and a 4.5 per cent stake in skincare and make-up distributor McPhersons.


Source: AFR