This site uses cookies. Some of the cookies are essential for parts of the site to operate and have already been set. You may delete and block all cookies from this site, but if you do, parts of the site may not work. To find out more about cookies used on Trustnet and how you can manage them, see our Privacy and Cookie Policy.

By clicking "I Agree" below, you acknowledge that you accept our Privacy Policy and Terms of Use.

For more information Click here



It's look like you're leaving us

What would you like us to do with the funds you've selected

Show me all my options Forget them Save them
Customise this table
Share   Print      RSS

British Polythene (BPI)

British Polythene

Response to Macfarlane Offer
British Polythene Industries PLC
8 November 2000

              British Polythene Industries PLC

           A deserved response to a derisory offer

The  Board of British Polythene Industries PLC ('BPI') notes
the    latest   announcement   by   Macfarlane   Group   plc
('Macfarlane')  that  it has received  acceptances  of  only
1.24% of BPI's issued ordinary share capital.  The Board  of
BPI  believes that this is indicative of the fact that BPI's
shareholders have recognised Macfarlane's offer for what  it
is - derisory.

The  Board  of  BPI  believes that this offer  significantly
undervalues  BPI.   That  is  why  the  Board  continues  to
recommend  BPI's  shareholders to reject Macfarlane's  offer
outright.   Further,  there are a number  of  factors  about
Macfarlane  and its offer which BPI's Board  would  like  to

Macfarlane is trying to acquire BPI on the cheap

Macfarlane  has now posted two documents in connection  with
its  offer, in which it was critical of BPI's management and
track   record.   The  Board  of  BPI  believes  that  these
criticisms  lack  credibility given Macfarlane's  own  track

  -  From 1996 to 1999 Macfarlane's pre-tax profits declined
     by 87% to £2.6 million.
  -  Macfarlane's share price has declined by 66% over the
     past 3 years and 72% over the past 5 years.
  -  Since  14  June 1999, the date on which Iain  Duffin
     joined Macfarlane as Chief Executive, Macfarlane's share
     price has fallen by 30%.
The  Board  of  BPI  believes that  Macfarlane's  criticisms
demonstrate its fundamental lack of understanding  of  BPI's
businesses  and  that, having failed to deliver  shareholder
value  in  its  own  business, it is now clearly  trying  to
compensate  for its own shortcomings at the expense  of  BPI

Macfarlane  stated in its offer document of 17 October  2000
that its directors believe:-

'the  acquisition of BPI will add to shareholder  value  and
will  be  strongly  enhancing to Macfarlane's  earnings  per

At  250p  per share, this is undoubtedly the case.  But  why
should BPI's shareholders suffer for Macfarlane's benefit?

Macfarlane can afford to pay more

Macfarlane has raised a financing facility of £230 million -
well in excess of that required to finance its offer.   This
indicates  that Macfarlane has the capacity to significantly
increase its offer.

Furthermore,  Macfarlane has suggested that a  restructuring
charge  of £30 million, which is equivalent to over 80p  per
BPI  share,  is necessary.  BPI has already carried  out  an
extensive restructuring of its business, at a far lower cost
than  £30 million, and BPI's Board fails to see how  further
significant  restructuring charges could be justified.   The
Board  of  BPI is not surprised that Macfarlane  refuses  to
articulate  its plans for this massive charge, and  believes
that  shareholders should question Macfarlane  hard  on  the
nature  of the charge.  If, as the Board of BPI believes  is
the  case,  it is not necessary, then it further  highlights
the  derisory nature of this bid and suggests Macfarlane can
clearly afford a higher offer.

Macfarlane  displays a fundamental lack of understanding  of
BPI's businesses

In  its  document of 2 November 2000, Macfarlane  criticises
BPI  for  ascribing  its  recent  trading  difficulties   to
external   factors,  once  again,  suggesting  a   lack   of
understanding  of BPI's businesses and markets.   The  facts
are these:

  -  BPI is the largest purchaser of polyethylene in Europe,
     and consequently enjoys significant buying power.  Despite
     this, the price of polyethylene clearly has some effect on
     the business.
  -  BPI is the largest producer of polythene film products
     in  Europe and the Euro zone is a major market for BPI.
     Clearly, exchange rate fluctuations will affect the business
     to some extent.
  -  One of BPI's major products is silage stretch wrap for
     the agricultural sector.  This sector can be affected by
     weather conditions which, in turn, can affect the market for
     silage stretch wrap.
Macfarlane's criticism of BPI is highly selective
In  its  document  of  2 November 2000 Macfarlane  questions
BPI's  record  for  managing  and integrating  acquisitions,
selecting  just three acquisitions of businesses which  have
subsequently been sold.  In fact, the vast majority of BPI's
acquisitions  have been successful, delivering returns  well
in excess of BPI's cost of capital.

Commenting, BPI's Chairman, Cameron McLatchie said:

'We  have consistently said this offer is derisory and  this
low  level of acceptances confirms it.  Macfarlane does  not
understand the dynamics of our business, our scale  and  our
market-leading positions and this is reflected in its  gross
undervaluation  of BPI.  We continue to advise  shareholders
to  reject  what is clearly an opportunistic  bid  at  their
expense.  This business is worth a lot more.'


BPI                  Cameron McLatchie,     01475 501 000
                     Chief Executive
Greenhill & Co.      Simon Borrows          020 7440 0400
Financial Dynamics   Tim Spratt             020 7831 3113

Greenhill & Co. International Limited ('Greenhill  &  Co.'),
which  is  regulated in the United Kingdom by The Securities
and  Futures Authority Limited, is acting for BPI and no-one
else  in  connection  with  the  offer,  and  will  not   be
responsible  to  anyone  other than BPI  for  providing  the
protections afforded to customers of Greenhill & Co., or for
providing advice in relation to the offer.
Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

You are currently using an old browser which will not be supported by Trustnet after 31/07/2016. To ensure you benefit from all features on the site, please update your browser.   Close