Goodpack hits highs amid reports of KKR talks

[SINGAPORE] Goodpack's shares continued marching to record highs yesterday, amid news reports that it is in advanced talks with US private equity firm KKR & Co.

Its shares ended two cents higher at S$2.47 yesterday, far above the record of S$2.15 last reached in July 2007. Its shares have risen for four straight days, with increased trading volumes in the last two.

Reuters and Wall Street Journal (WSJ), quoting unnamed sources, yesterday reported that KKR is nearing a deal to buy the Singapore packaging logistics company for at least US$1 billion.

In an update yesterday on its talks with various parties on a possible transaction, Goodpack said that "matters have progressed" since April 17 and that it was now continuing talks with one of the parties.

While Goodpack had reportedly held meetings with two other private equity players Blackstone Group and Carlyle Group early last month, The Business Times understands that they had dropped out of the running.

But the run-up in the share price could imperil the KKR deal as well, given that minority shareholders could ask for a larger premium over an already increased share price.

CapitaLand, which has launched a takeover for CapitaMalls Asia, has had to sweeten the deal by raising the offer price after minority shareholders and market watchers complained that it was too low; in another deal, Ong Beng Seng and Wheelock Properties also raised their offer price for shares in Hotel Properties Ltd after they bought shares in married trades at a higher price.

There is no certainty yet that a deal may happen, according to WSJ.

Goodpack's shares have risen 22 per cent from S$2.03 since the firm first said on March 19 that it has been approached by unnamed parties which could lead to a general offer being made. The company has appointed Rippledot Capital Advisers as its financial adviser, and its founder David Lam - who owns 32 per cent of the firm - is said to be open towards a takeover offer.

KKR set up its South- east Asia office in Singapore in October 2012, and the potential acquisition would mark its first deal here since then.

Goodpack has, over the years, attracted various suitors.

In 2008, it hired Macquarie to look at strategic alternatives - from a sale to a strategic buyer to bringing in new investors. At that time, Australian packing companies Loscam and Brambles were reported to be interested in bidding for the firm.

Brambles, which leases wooden pallets, reusable plastic containers and intermediate bulk containers (IBCs) to the fast-moving consumer goods industry, said on March 20 that while it has engaged in preliminary discussions with Goodpack on several previous occasions, including in the recent past, these did not progress.

Analysts attribute Goodpack's appeal to its strong position in a market niche and its global network which makes for a wide economic moat.

Goodpack rents reusable IBCs to tyre manufacturers, chemical and juice producers such as Michelin, Bridgestone, BASF, Campbell and Heinz, for use in transporting their products, replacing the traditional wooden boxes and metal drums used in these industries.

The firm last Monday posted a 20.2 per cent increase in third-quarter net profit to US$13.1 million. Revenue rose 14.2 per cent to US$51.2 million.