• Raphael Geminder, chairman of Kin Group, is spearheading the takeover bid for Pact Group Holdings.
    Raphael Geminder, chairman of Kin Group, is spearheading the takeover bid for Pact Group Holdings.
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Raphael Geminder has told Pact shareholders that the company's statement on the independent Knoll report, which indicated his offer was too low, has serious shortcomings.

Geminder’s Kin Group, which is attempting to buy the half of the business it does not own, said the statement by Pact on the Knoll report was flawed because it “is not balanced, is selective, and has the potential to mislead”.

Kin says the fact that the Pact share price is not falling, when the ASX has slumped 4.1 per cent over the past fortnight, is due to its bid, and called on shareholders to accept the “liquidity and certainty” the bid provides.

However, Pact shareholders have so far shown little interest in the bid, with only 0.2 per cent of shares going to Kin since the offer was launched. The offer would give stockholders 68c a share, which was half a cent premium over the price when it was launched, but is now 4c behind the current 72c price.

The Knoll report valued the company’s share price much higher, at between $1.06 to $1.51. The Pact independent board committee has said the Kin offer is “neither fair nor reasonable”. The offer is scheduled to close in a fortnight, on 8 November.

Kin says the Knoll valuation also fails to highlight the material increase in net debt by at least $96m in the two months from June to August, is based on the hypothetical and impossible scenario where a foreign entity would buy 100 per cent of Pact, and doesn’t caution shareholders of the risks facing Pact, nor that its share price may fall when the offer expires.

Pact’s second biggest shareholder IML is reportedly uninterested in the offer.

Meanwhile, Pact is engaged in its $20m cost-cutting programme, and has shed some 175 jobs since August, mainly in back office and administrative roles. It is reportedly aiming to sell its Viscount Rotation Mouldings business, looking to realise around $25m.

And according to the Knoll report, Pact is aiming to put its contract manufacturing business up for sale before the end of the year, two years after it pulled it from the market after an unsuccessful sale attempt. Knoll has valued it at between $113m and $127m.

The division comprises Jalco, Pascoe’s and Australian Pharmaceutical Manufacturing, and manufactures a range of container products, with a total revenue of $357m for the financial year just gone, which saw it back into the black to the tune of $3.3m after a $4m loss the year before.

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