Pact Group shares rocket after board backs takeover bid

The news: Shares in packaging solutions play Pact Group have surged to equal a takeover offer price from Bennamon Industries, after the offer was recommended by Pact's board.

The numbers: Pact Group's share price has swollen 22.7% to $0.84, the value of a revised offer by Bennamon, which is owned by investment firm Kin Group. Bennamon's original offer of $0.68 underwhelmed the board when it was made in September. Pact's market capitalisation under the current price is $235.8 million, which is still significantly lower that its $480 million valuation last year.

The context: Kin owned more than half of Pact's shares when it made the low-ball offer in September. Pact's share price has declined more than 87% in the past six years, amid lower earnings, higher leverage, higher capital expenditure, and reduced free cash flow in the face of issues including supply chain disruptions, inflationary pressures and labour shortages.