Shareholders expected to accept One51 offer

A number of One51 shareholders are expected to accept private equity fund Capvest’s proposed €1.80 a-share offer for the plastics and waste group, raising the prospect of a formal bid for it from the Irish-led investor.

Capvest has indicated it is willing to pay €1.80 for One51 shares and is also giving shareholders the option of retaining some of their equity, once it gets control of the group.

Initial soundings indicate that some shareholders are considering the selling part of their interest in One51, while others, particularly the co-ops, could elect to accept Capvest’s offer outright.

UK-based Capvest, co-founded and led by Irish man Séamus Fitzpatrick, has yet to make a formal offer for One51, but has lined up bank funding of €280 million for the deal and is thought likely to proceed if enough shareholders are willing to sell.

Premium

The €1.80 offer values One51 at €288 million, about eight times earnings before interest, tax and write-offs. This is at a premium to deals done by the group itself in the sector earlier this year and in 2014.

One51’s purchase last month of a majority stake in Canadian plastics company, IPL for €201 million, was pitched at about seven times earnings. The price it paid for a similar business, Straight, last year, valued that at about five times earnings.

While a €1.80 offer would be considerably less than the €5 paid by some investors when One51 was founded as an investment spin-off from IAWS a decade ago, the price may still be enough to tempt some of its original backers.

Tax rules

Capital gains tax rules will allow them to write 30 per cent of their loss off against any profits they may have made from trading in other assets. Maximising this could bring the real proceeds from selling their One51 equity to almost €3 a share. In addition, One51 priced a rights issue at 90 cent a share late last year.

The option of holding on to part or all of their stake allows them to gain from any future growth following a Capvest’s takeover.

As it is a private equity investor, it is likely to sell the business or float it within a relatively short time.

While One51 is a plc, its shares are traded on a grey market rather than listed on any stock exchange. As a result, Capvest is not obliged to offer to buy the company outright. That allows it to give stakeholders the option of staying on board after it takes over.

One51 emerged from food group IAWS – now Aryzta – in 2005 and it still has a number of its co-op shareholders from that time.

Current investors include Pageant Holdings, Kerry Co-op, Larry Goodman's Vevan and Fane Valley Co-op. While it began as a diversified investment group, it is now focused on plastics and hazardous waste management and recycling.