Macfarlane Group PLC
2 November 2000
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES,
CANADA, AUSTRALIA, THE REPUBLIC OF IRELAND OR JAPAN
2 NOVEMBER 2000
MACFARLANE GROUP PLC ('MACFARLANE') CASH OFFER FOR BRITISH
POLYTHENE INDUSTRIES PLC ('BPI')
MACFARLANE RESPONDS TO BPI CLAIMS AND DEFENCE
Macfarlane is today posting a document to the shareholders of
BPI which not only responds to the document which BPI sent to
its shareholders on 23 October 2000 ('the defence document')
but also questions claims made by BPI's management in recent
years, contrasting them with the reality of BPI's financial
record.
Macfarlane's document sets out four key questions for BPI
shareholders and, with quotes from BPI itself, provides
compelling evidence of a lack of credibility.
* How credible are BPI's claims on future performance?
- BPI has made many claims in the past about the
future prospects for its business. Can shareholders
believe the board of BPI can accurately predict
BPI's future prospects and deliver increased profits
when it has consistently failed to deliver improved
performance?
* How credible are BPI's restructuring plans?
- In recent years BPI has claimed repeatedly that
reorganisation will lead to profit improvement but
again has failed to deliver.
* How credible is BPI's acquisition record and strategy?
- Over the last three and a half years, BPI has
spent an amount equivalent to more than 250 pence
per share on acquisitions and capital expenditure
and has made many predictions of increasing growth
and profits . but profits have continued to decline.
* Is it credible for BPI to blame external factors for poor
results?
- External factors that have been blamed include
the strength of sterling, raw material prices, the
Government recycling policy, the climate control
levy . and even the weather.
In the defence document the board of BPI has made a number of
claims which Macfarlane believes are both wrong and clearly
demonstrate that BPI's board fails to recognise the difficult
position in which BPI is now placed.
* Claim
BPI claims that Macfarlane's cash offer of 250 pence per
share 'fundamentally undervalues BPI'.
Fact
In fact, on 5 September 2000, the day prior to BPI
announcing that it had received approaches, its share
price was 178.5 pence. Earlier this year its shares
traded as low as 137.25 pence (as disclosed in the Daily
Official List on 11 May 2000). Macfarlane's offer of 250
pence represents a premium of 40 per cent to the stock
market price of BPI's shares the day before BPI announced
it had received approaches and a premium of 82 per cent
to the lowest trade earlier this year.
* Claim
BPI claims that Macfarlane's offer 'discounts BPI's scale
and market-leading positions'.
Fact
In fact, the Offer does take account of these factors.
Size alone does not produce profits. We believe one of
the BPI board's key failings is that it has not grasped
the opportunity to deliver the value which BPI's scale
and market leading position should have allowed.
* Claim
BPI claims that Macfarlane's offer is 'highly
opportunistic'.
Fact
The reality is that Macfarlane and BPI had intermittent
contact regarding a possible combination of the two
companies over a lengthy period and the industrial logic
for combining the two companies was never questioned.
Macfarlane launched its cash offer when it became clear,
in the opinion of its directors, that the board of BPI
had a wholly unrealistic view of BPI's value and
prospects.
* Claim
BPI claims that Macfarlane's offer 'ignores the benefits
of actions already taken to eliminate loss making
businesses' and 'ignores the benefits of actions already
taken to reduce costs'.
Fact
In 1996, BPI's board claimed that it was confident that
BPI shareholders could look forward to increasing rewards
in years to come and they have made similar claims in
subsequent years.
Macfarlane believes that BPI's latest restructuring plan,
which is claimed in the defence document to be well advanced,
will once again fail to deliver value.
Macfarlane believes that the BPI defence document shows
indignant complacency and repeats tired old themes and claims
which shareholders have heard before. In Macfarlane's opinion,
the defence document fails to demonstrate how BPI's board will
deliver shareholder value approaching 250 pence per share.
John Ward, Chairman of Macfarlane, said:
'The key issue facing BPI shareholders is do they accept cash
of 250 pence per BPI share now or risk sticking with BPI in
the hope that its management will eventually deliver the
improvement in profitability it has been promising for years?
BPI shareholders should accept Macfarlane's generous offer
now.'
Enquiries:
Macfarlane Group PLC
Iain Duffin 0141 333 9666
Noble Grossart Limited
Sir Angus Grossart 0131 226 7011
Todd Nugent
HSBC
John Hannaford 020 7336 9000
Beattie Media
Gordon Beattie 01698 787878
Bell Pottinger
Kate Power 020 7353 9203
Copies of the document posted today by Macfarlane as well as
the offer document and the form of acceptance are available
free of charge from Lloyds TSB Registrars, Antholin House, 71
Queen Street, London EC4N 1SL (telephone 0870 600 2027).
The directors of Macfarlane (whose names are set out in
paragraph 2 of Part 7 of the Offer Document) accept
responsibility for the information contained in this
announcement save that the only responsibility accepted by
them in respect of the information contained in this
announcement relating to BPI, the BPI group and the directors
of BPI other than the statements made about BPI above in
relation to the previous contact between Macfarlane and BPI,
which has been compiled from publicly available sources, has
been to ensure that such information has been correctly and
fairly reproduced and presented. Save as aforesaid, to the
best of the knowledge and belief of the directors of
Macfarlane (who have taken all reasonable care to ensure that
such is the case), the information contained in this
announcement for which they accept responsibility is in
accordance with the facts and does not omit anything likely to
affect the import of such information.
Noble Grossart Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting
exclusively for Macfarlane and no one else in relation to the
Offer and will not be responsible to any person other than
Macfarlane for providing the protections afforded to customers
of Noble Grossart Limited or for giving advice in relation to
the Offer. Nothing in this announcement should be construed
as a profit forecast or be interpreted to mean that the future
earnings per share of the enlarged group will necessarily be
greater than the historic published earnings per share of the
Macfarlane group.
*A Private Investor is a recipient of the information who meets all of the conditions set out below, the recipient:
Obtains access to the information in a personal capacity;
Is not required to be regulated or supervised by a body concerned with the regulation or supervision of investment or financial services;
Is not currently registered or qualified as a professional securities trader or investment adviser with any national or state exchange, regulatory authority, professional association or recognised professional body;
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Uses the information solely in relation to the management of their personal funds and not as a trader to the public or for the investment of corporate funds;
Does not distribute, republish or otherwise provide any information or derived works to any third party in any manner or use or process information or derived works for any commercial purposes.
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