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Former Valpak CEO questions value of proposed buyout

Valpak members should “seriously question” voting in favour of a proposed £1.4bn restructure of the company, a former chief executive of the compliance giant said this week.

John Turner, who led Valpak in the late 1990s, said the deal appeared to offer more for the firm’s management than its 4,004 members, which currently own the scheme.

Turner told MRW he was “deeply disappointed” the current management was seeking to change the Valpak model.   

Members needed to question whether a £610 payment represented sufficient benefit, he told MRW.    

“Looking from the outside it would appear the only people that seem to benefit from this move are the directors, who are proposing to buy the company,” he said.

“Changing the business model for what was a successful, not-for-profit organisation owned by its members needs to be seriously questioned and one assumes the members are doing so.”  

Turner’s comments, which come after several market sources last week questioned the value of the deal, come just days before a cruical vote on the deal.

Members are set to vote on the proposed package - which the firm’s management said was “fair and reasonable” - on Thursday 26 January.

Turner, former chairman of the government’s Advisory Committee on Packaging, added that Defra’s consultation on higher packaging recycling targets suggested Valpak’s current business model remained robust and that companies could benefit from membership.

Valpak marketing director Duncan Simpson told MRW last week the offer was “fair and reasonable”.

“The board obtained professional advice in support of the decision to accept the original offer based upon the decision criteria used and its expectation of likely interested parties,” he added.

If members give the restructure the go-ahead, the firm’s existing management will buy 70% of the firm with German compliance scheme owner Greenpoint snapping up the rest.

Members will secure £340 each, a total of £1.4m, as an initial consideration if they sanction the deal. There would be a further £270 deferred consideration, some £1.125m in all, if the packaging regulations continue in 2013.

Valpak declined to comment directly on Turner’s comments.

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