Raphael Geminder buys Pact on market after shares tank in initial privatisation move

Raphael “Ruffy” Geminder can take Pact Group private. Picture: Arsineh Houspian

Almost a year on from Raphael Geminder’s embarrassing failure to buy out Pact Group, the rich-lister finally looks set to get his way with the packaging maker.

Probably.

That’s courtesy of the ASX’s ­decision this week to let Geminder – who controls 88 per cent of Pact shares – take the company private, a year on from the failed takeover attempt.

There will be a shareholder vote on June 12. But the ASX has allowed Geminder to vote his interests on the day, meaning the decision is all but made.

It’s another headscratcher from ASX, which you’d think would be still smarting from the James Hardie furore.

As minority shareholders have been keen to say, the decision leaves them with Hobson’s choice – either sell up at a discounted rate before Pact leaves the ASX, or stay on as minority shareholders in an unlisted company where the only future buyer is Geminder.

But there’s still a rump of dissent determined to fight the outcome. Perpetual Geminder irritants Mark Gandur and David Harris blocked the billionaire’s takeover of Pact last year, cobbling together enough shareholder support to deny Geminder the 90 per cent holding needed to move to compulsory acquisition.

Leading the resistance this time is former Goldman Sachs banker Jeremy Raper, who has only recently built up a stake in Pact.

Raper is happy to admit that his interest in the company came on the assumption that Pact Group’s governance would improve after the failed takeover, and a second offer was likely to come that was closer to his view of fair value than the 84c a share that failed last time round.

Possibly a miscalculation, in retrospect.

Anyone who has been following Rio Tinto’s mop-up at ERA could have told him that the big kids rarely fight fair, and almost never when money is at stake.

And for its part, Geminder’s camp says it had always been clear about the plan to take Pact private should the takeover not succeed in mopping up minority shareholders – anyone buying after that point should have known the risks.

But Raper might have a pretty good point about the need to protect minority shareholders. Not least because Geminder has been buying on the market, by the look of it after Pact’s privatisation announcement sent its shares tumbling in late April.

Since then Geminder’s interests have picked up some 309,963 shares at an average price of about 89.8c, according to a late disclosure on Tuesday night from the company. That is above the 84c on offer last year, but well below the $1.09 trading level before the April 29 privatisation announcement, which came with a business update warning of a softening outlook for its packaging business and sent shares tumbling.

Raper argues that Geminder is just trying to get Pact on the cheap. Again. But he has already failed to convince the ASX to exclude ­Geminder’s votes from any decision on the subject.

Geminder is perfectly entitled to use the so-called “creep provisions” in takeovers laws to increase his stake. But the decision to buy on-market after the privatisation announcement does seem to highlight arguments that he’s running a takeover by stealth.

The problem for Raper, Gandur and Harris – and other smaller holders – is that their options are now limited. Unless the ASX can be convinced to change its mind, the only real option is the Takeovers Panel, and that can be a long shot at the best of times.