Valpak directors unveil revised buy-out proposal
5 January 2012
The senior management of Valpak – the UK’s largest packaging producer compliance scheme – have teamed up with Germany’s market leader in compliance services to put forward a revised offer to buy-out the company from its members.
Valpak’s senior management originally offered to buy Valpak in August 2011 (see letsrecycle.com story). But, the process had to be put on hold to give its non-executive members a chance to consider other outside expressions of interest.
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- A vote is set to take place on the revised management buy-out proposal at Valpak's offices in Stratford-upon-Avon on January 26
However, now that process has been completed and the non-executive directors wrote to members today (January 5) recommending that a revised offer, now involving Greenpoint Holdings SCA, is approved.
Greenpoint is a Luxemberg-based holding company which is the sole owner of the principal compliance scheme in Germany, Der Grüne Punkt - Duales System Deutschland GmbH (DSD), which collects, sort and recycles packaging bearing the Green Dot. Valpak said that it would bring a ‘wealth’ of knowledge and experience about operations in other parts of Europe and further afield.
If approved, Greenpoint will own 30% of Valpak, with the senior management holding 70%.
If they agree to surrender their shares in the business, each of Valpak’s 4,004 members will receive £340 as an initial consideration (£1.4m in total) which is double the original proposal. The extra will be funded by Greenpoint. A further £270 deferred consideration will be payable to each member (£1.125m in total) if the packaging regulations continue in 2013.
Greenpoint will also make £2m capital available to Valpak for investment in the future development of services and products both in the UK and internationally.
Interest
Gerald Orbell, senior independent director at Valpak who was involved with assessing all the offers for the business, explained in documents sent to members that in all, nine unsolicited expressions of interest in Valpak’s business were received, of which two were withdrawn.
The remaining offers were from: DHL, Green Point Holdings S.C.A., Recycling Lives Holdings Limited, Uniserve Holdings Limited, Veolia (ES) UK Limited, WeeeCare Plc and Monoworld Limited.
And, while he said that a number of them “would have provided members with a higher level of financial consideration”, he concluded that none on their own was as effective in addressing Valpak’s members’ priorities as the original MBO.
“However, the Independent Directors did consider that the Original MBO could be
significantly enhanced by the inclusion of one of the potential offers, Greenpoint, who
had expressed a willingness to submit a joint bid along with the Original MBO team”, he explained. “We therefore asked the Executive Directors to explore this option with Greenpoint.”
Greenpoint
Commenting on the proposal, Philippe von Stauffenberg from Greenpoint said: "We are delighted to be involved with Valpak in this very exciting new venture. During our discussions with Valpak we have been very impressed with the quality of their team, and we are looking forward to working closely together in the future. We also want to stress to Valpak members that we believe the UK recycling compliance system works extremely well and should remain in place. We are eager to learn from and apply Valpak’s expertise and experience with the UK system."
"We are eager to learn from and apply Valpak’s expertise and experience with the UK system"
Philippe von Stauffenberg, Greenpoint
The Rt Hon John Gummer, the executive director of Valpak who is set to receive the largest share in the business if the deal goes ahead, wrote in his accompanying letter to members: “I believe that this proposal represents a significant improvement for all stakeholders and will make Valpak even better equipped to meet the challenges it faces on your behalf. I would like to thank you for your patience whilst this proposal has been finalised and I hope that you agree that it puts Valpak in a strong position to thrive and grow so that it can continue to deliver existing and new services into the future.”
Shares
Under the proposed restructure, 10% of the initial value of the business to be allocated to Valpak staff as share options.
Valpak’s chief executive, Steve Gough said: “Since our initial plans in the summer were put on hold, Valpak received a number of expressions of interest for the business. Of all the expressions of interest, the approach from Greenpoint offered the best future structure for Valpak and its members.”
“In particular I am very pleased that as well as offering an improved compensation for members, the revised offer guarantees access to funds that will enable us to develop and invest at a faster rate that we would have been able to do otherwise. In addition we have built in a scheme whereby existing staff will have the opportunity to develop a stake in the future success of the company through a share options scheme.”
Vote
A vote on the proposed restructure is set to take place at a meeting at Valpak’s offices in Stratford-upon-Avon later this month (January 26).
If the Valpak members approve and the court sanctions the scheme, the business of Valpak will be transferred to a newly formed company, Valpak 2011. This will then be acquired by Hamsard, which will be jointly owned by Greenpoint and Valpak’s executive directors and four members of its senior management team.
The members are: chair John Gummer, chief executive Steven Gough; finance director Philip Gale; director of policy Adrian Hawkes; director of procurement Alan Price; director consulting Andrew McCaffery; director of sales and marketing Duncan Simpson and director of customer service and compliance Ruth Beckley.
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As part of the deal Greenpoint will have representation on the Board of Valpak, but the existing Independent Directors will remain to ensure continuity for at least a year.
If approved, Valpak expects the changes to be effective sometime in February 2012.
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