News that Madison Dearborn is prepared to pay around €350 million for Irish-Canadian plastics-maker IPL may help resolve a row building between management, led by chief executive Alan Walsh, and shareholders with about 30 per cent of the company, represented by lawyer and businessman Noel Smyth.
Chicago-based Madison Dearborn, best known to Irish people for a previous involvement in packaging giant Smurfit Kappa, is offering 555 million Canadian dollars (€353m) to buy IPL, which makes wheelie bins, food containers and other products.
The $10-a-share offer is below the $13.50 at which IPL floated on the Toronto Stock Exchange, but is a 49 per cent premium to its closing quote on July 28th, and a 69 per cent premium to the average price over the 20 days leading up to that date.
On the one hand, the Irish shareholders are likely to be happy there is an offer on the table. Following IPL’s agm in June, Smyth said he and the others favoured a sale.
He welcomed news of the offer on Wednesday, but stressed that management should establish if it can get a better deal for the company, and if not ensure that Madison pays the $10 that it has offered.
Madison’s offer includes a “go-shop” provision that allows IPL to seek a better deal. If it gets this the US private equity investor will either match it or walk away. The board has hired BMO Capital Markets to approach likely buyers for a higher offer.
This should help satisfy Irish shareholders that the company is trying to find a better deal if there is one out there. In the meantime Smyth and the backers are pursuing complaints against the company to the Toronto Stock Exchange and regulator Canadian Securities’ Administrators stemming from their argument that the company has not paid sufficient attention to their interests.
IPL traces back to the old IAWS food and agriculture supplies business. It went through a few twists and turns before emerging as an Irish-Canadian plastics-maker. The next few weeks are likely to add some more interesting chapters to that history.