IPL to pay deal-breaker fee if it finds better offer than €350m

Plastics maker IPL faces deal-breaker fees of up to €12.3 million should it flush out a higher offer than the €350 million that US investor Madison Dearborn has put on the table.

The beleaguered Irish-Canadian wheelie-bin and ice-cream-container manufacturer confirmed earlier this week that Madison Dearborn had offered to buy the business for about €350 million.

Filings with the Toronto Stock Exchange, where IPL is listed, show that it will have to pay Madison 19.4 million Canadian dollars (€12.29 million) should it accept a higher offer than the US bidder's C$10 a share.

Month duration

The agreement includes a “go-shop fee” which allows IPL a month to see if other businesses are willing to pay more than Madison Dearborn’s offer. The C$19.4 million is only payable if IPL accepts a better offer that emerges outside the terms of the go-shop agreement.

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However, even if IPL accepts a better offer secured under the terms of the go-shop clause, it will still have to pay Madison Dearborn C$8.4 million.

For its part, Madison Dearborn has agreed to pay IPL C$38.7 million if the US company terminates the deal, after the plastics manufacturer secured the backing of two-thirds of its shareholders and regulatory approval for the transaction.

Unlikely to emerge

Irish shareholders, who hold between 25 and 30 per cent of IPL, want the company to establish whether or not it can secure a better offer before accepting the Madison Dearborn bid.

The offer price is 26 per cent below the $13.50 at which IPL began trading when it first listed on the Toronto Stock Exchange in June 2018.

However, industry analysts suggested this week that a higher bid is unlikely to emerge. Madison is offering a 150 per cent premium to IPL’s price in May, before rumours of a bid began circulating.

The price is also a 69 per cent premium on the average at which the company traded on the Toronto Stock Exchange for 20 days up to July 28th.

IPL has factories in the Republic, Canada, the US, the UK, Europe and China.