Pact Group founder and chairman Raphael Geminder, who holds a just-over 50% stake in the company, is on a quest to delist it from the ASX.
Geminder faces an uphill battle as he bids to take over the struggling packaging company at 68 cents a share — a figure below its current share price.
Geminder must first gain approval from minority shareholders and the board, which is currently seeking an independent valuation of the firm.
The off-market takeover bid was launched by Geminder's private investment arm, Kin Group, which plans to open an acceptance window for Pact shareholders in two weeks.
Surge in price on announcement
The announcement immediately led to an 8% surge in Pact's shares, closing at 72.5 cents. This increase could complicate matters if the stock continues to outperform Geminder’s offer.
Geminder has to amass at least 75% ownership for the privatisation and will require ASX approval.
Previous takeover attempts by him of other public companies did not involve multiple bids or raising the offer price. Kin Group said the intent to delist Pact was due to the added costs and market volatility of being a public company.
Investors Mutual, holding just under a 7% stake, remains a key player but has not yet revealed its hand.
Pact has been beleaguered by heavy losses, rising debt and a depreciating share value — down by 58% in the past year. The company floated on the ASX in 2013, raising about A$649 million at an initial offer of A$3.80 per share, marking the largest initial public offering (IPO) in the Australian market that year.
Pact’s board has refrained from making any formal recommendations to its shareholders about the offer. Geminder argues that private ownership would mitigate the risks of market volatility and operational challenges.
The offer comes amid supply chain disruptions, inflationary pressures and other economic uncertainties plaguing the company.