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Why Goodpack Had Jumped 5% Today

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Goodpack (SGX: G05) had opened at S$3.46 today, up more than 5% from its close of S$2.34 the previous day. Turns out, news had broke yesterday that KKR (NYSE: KKR), one of the largest and most successful private equity firms in the world, has offered to take Goodpack private at S$2.50 per share. The deal would value Goodpack at S$1.39 billion in its entirety.

So what: Goodpack’s a logistics outfit that rents out its patented reusable intermediate bulk containers (IBC). The company’s IBCs can be used to store solid commodities, such as rubber, coffee, and chestnuts, and can also be used for liquids like apple juice, edible oils, and milk fat. The company earns its keep by renting out its IBCs to customers either on a per-trip basis or for a fixed time period.

Over the years, Goodpack has been no stranger to privatization news. Since 2008, the company has indicated its interest in selling itself. Although it temporarily shelved its selling plans during the Great Financial Crisis of 2008-09, it revisited the possibility of a sale back in April this year with Brambles, an Australian pallet maker. Following a breakdown in talks with Brambles, Goodpack then held discussions with other private equity firms like Blackstone (NYSE:BX) and Carlyle (NYSE: CG). But as we now know, it’s KKR that has eventually emerged with an offer.

Now what: Shareholders of Goodpack will have to vote on the deal. Although each shareholder might have different opinions regarding how fair the takeover price is, it’s worthwhile noting that the company’s main shareholder, Mr. David Lam, who owns 32% of the company, has indicated his willingness to sell all his shares. KKR plans to take full control of Goodpack and delist it from Singapore’s stock market.

The private equity firm has been very aggressive over the past few years and that’s not surprising considering it has US$138 billion in cash in its coffers as of the end of last year; all that money’s waiting to be deployed in deals.

If Goodpack’s deal is allowed to go through, it will be KKR’s third deal in Singapore in the private equity firm’s history. Back in 2007, KKR had invested in a data-storage company, MMI Holdings. KKR had also bought into electronics manufacturer Avago Technologies prior to the latter’s listing on the NASADQ stock exchange in the USA in 2009.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.