Plastics manufacturer Ropak Corp. said that a British competitor has offered to buy the company for $41 million in cash and that the founding Roper family, which controls a 25.4% stake, favors the proposed merger.
The family--led by Ropak executives and brothers William H., Robert E. and C. Richard Roper--agreed to give Linpac Mouldings Ltd. in Birmingham, England, the right to vote its shares on the merger proposal at a soon-to-be-scheduled shareholders meeting.
Privately held Linpac, which already owns 8.5% of Ropak, is offering $10.50 a share in cash for the remaining stock.
News of the merger proposal caps 10 days of heavy trading in Ropak stock. Last Friday, CNBC television commentator Dan Dorfman speculated that Linpac was in a bidding war for Ropak with Stone Container Corp. in Chicago. But Ronald Cameron, Ropak's chief financial officer, said Wednesday that his company "had no contact" with Stone Container.
The price of Ropak's stock climbed $1 a share Wednesday on the company's announcement to close at $10 a share--its highest price in the past 12 months--on the Nasdaq market system. The number of shares trading hands was nearly eight times the average daily trades over the previous three months.
If shareholders approve the deal, Ropak would continue to operate as a Linpac subsidiary, Cameron said. Linpac is expected to keep all of Ropak's 900 employees at six U.S. plants and four Canadian facilities, including 30 corporate workers at Ropak's headquarters in Fullerton and 100 at its La Mirada plant, Cameron said.
The Roper brothers founded the company in 1978 to make plastic storage products. Since then it has expanded to make pails and shipping containers, spray-on plastic coatings and plastic farming equipment.
Linpac, a family-owned company with 50 manufacturing plants worldwide and 1 billion--$1.6 billion--in revenue last year, makes plastic, paper and metal packaging products. Linpac's strategy in acquiring Ropak is to bolster its bulk food packaging business, one of Ropak's strengths.
The agreement between the Roper family and Linpac comes with offsetting options in the event shareholders turn down the deal: Linpac can still acquire the Roper family's stock at $10.50 a share and the family could force Linpac to buy its stake at a price to be fixed later.
Ropak's stock price has been rising since last week, but Cameron said neither company officials nor Linpac were buying the stock. Earlier this month, though, two Wall Street newsletters had recommended buying the stock, he said.
In addition, investment banking firm Cruttenden & Co. in Irvine bought 100,000 shares of Ropak last week after an analyst visited the company. But Cruttenden analyst Peter Castellanos said the purchase was not related to a possible merger.
"We were buying in the normal course of business," he said Wednesday.
Merger Plans at a Glance
Ropak Corp., a Fullerton-based packaging manufacturer, has announced plans to merge with Linpac Mouldings Ltd., based in England.
ROPAK CORP. * Business: International manufacturer of plastic shipping containers, packaging and handling products * Headquarters: Fullerton * Founded: 1978, by Robert E. Roper, C. Richard Roper and William H. Roper * Employees: 900 * CEO: William H. Roper * Major stockholders: Roper family (25.4%) and Linpac Mouldings (currently 8.5%). Proposed merger grants Linpac the right to vote Roper family shares.
LINPAC MOULDINGS LTD. * Business: International manufacturer of plastic, corrugated fiberboard and metal packaging materials * Headquarters: Birmingham, England * Founded: 1962 * Employees: 7,000 * Managing director: David A. Williams * Major stockholders: Privately held
The company regrouped from a first-quarter loss to a record $2.3-million profit in the second quarter. Quarterly revenue has increased 80.4% since the first quarter of 1993.
ON THE UPSWING
Ropak Corp. stock, which previously traded between $5.75 and $9, jumped to $10 a share after the merger announcement. Monthly closing stock prices:
Wednesday's close: $10.00
Sources: Dow Jones, Bloomberg News Service, Ropak Corp.; Researched by JANICE L. JONES / Los Angeles Times