Packaging insider seizes on low ASX valuation in attempt to acquire Pact Group

Packaging company Pact Group (ASX: PGH) appears to be seriously undervalued by investors which has prompted the Company’s Chairman to rustle up a bid to acquire the entire business. 

The bid comes from Kin Group Ltd, an entity controlled by the Geminder family, of which Raphael Geminder is Chairman of Pact Group, and comprises an unconditional offer to acquire all PCT shares for $0.68 each. 

The Offer Price represented a small premium on PGH’s last close price of $0.675. 

This development comes at a time when Pact Group is navigating the evolving landscape of sustainability and environmental responsibility, making it an opportune moment for an insider to potentially reap substantial capital gains by acquiring the business.

Due to the conflict around the offer coming from the Geminder family, Raphael has stood down from all Board involvement regarding the offer, where the remaining Board members have advised shareholders not to act until further notice. 

In Geminder’s absence, independent director Michael Wachtel, will chair the relevant board and subcommittee meetings related to the offer. The board  is currently in the process of appointing independent advisers to provide impartial guidance on the matter. 

Pact Group is a well-established Australian company with a strong presence in the packaging and recycling industry. They provide a wide range of packaging solutions, from rigid plastics to flexible packaging, catering to various sectors such as food and beverage, personal care, and industrial. 

The company is deeply committed to sustainability and environmental responsibility. They have been at the forefront of efforts to reduce plastic waste and promote recycling solutions, aligning with global efforts to combat climate change.

The timing of this offer from an insider comes at a significant juncture for Pact Group. The global focus on sustainability and environmental responsibility has put pressure on packaging companies to innovate and adapt. Pact Group has been actively working on initiatives to reduce plastic waste and promote circular economy solutions. 

For FY23, Pact Group reported $1.95 billion revenue which represented a 6% increase on the previous year. Underlying NPAT of $45m was a 36% decrease on the previous year, which fell further to a $7m net loss after tax with adjustments. 

The drop in operating profit has been reflected in PGH shares drifting from $1.35 in March 2023 to $0.72 following news of the Geminder family’s intention to acquire the entire Pact Group. 

The Offer Price of $0.68 per share values Pact Group Holdings at $234 million.