IPL Plastics (IPLP, Montréal, Québec / Canada; www.ipl-plastics.com) has agreed to be acquired by US private equity group Madison Dearborn Partners (MDP, Chicago, Illinois; www.mdcp.com) in a deal that values the Canadian packaging company at CAD 555m (around EUR 352m) on an equity basis. Madison Dearborn will pay CAD 10 per share, 26% lower than the CAD 13.50 of its initial public offering (IPO) in June 2018. IPLP’s share price has performed poorly since its IPO, spurring interest from European and North American private equity firms, which has ultimately led to a formal offer that the board has approved.

IPLP conceded that it has experienced limited trading liquidity since its IPO, with its shares trading at a discount to larger public company peers for several reasons. Consequently, it said, this has made it more difficult to finance and execute on accretive growth opportunities, a situation aggravated by the negative impact of the ongoing Covid-19 pandemic, which has made the MDP offer attractive.

A transaction remains subject to approval from at least two thirds of shareholders as well as IPLP not agreeing a superior offer from another company within 30 days, which could be extended to 40 days in certain circumstances. IPLP has retained investment management firm BMO Nesbitt Burns (Toronto, Ontario / Canada; www.bmo.com) to approach potential parties with a view to soliciting a higher offer, which MDP is entitled to match.

If MDP’s offer goes ahead, it will become IPLP’s controlling shareholder. The majority of the existing shares owned by investor Caisse de dépôt et placement du Québec (CDPQ), currently IPLP’s largest shareholder, will roll over so that it will hold a minority equity stake of about 24.9%. A special meeting of IPLP shareholders to vote on the deal will be held in September 2020.