But instead of walking away, Bunzl yesterday announced it had upped its offer from the filters operation to a $178m bid for the whole company, saying it wants to keep the lot.
The City was unfazed by this apparent change of direction yesterday, sending Bunzl's shares 6.5p higher to 201p. Certainly the two groups have known each other for a very long time.
The family trusts which control 46 per cent of AFC's shares were set up by Walter and Rudolph Bunzl, part of one branch of the Viennese Bunzl family which left Austria in the 1930s to set up shop in America. The other went to Britain and established the present Bunzl.
The contacts across the Atlantic have not been close of late, but AFC looks to have grown into the sort of high-quality plastics and filter operation that Bunzl has also become. The logic of picking up the fibres side, which makes cigarette filters and the tips of felt-tipped pens, is clear.
Bunzl's decision in 1993 to set up a small US filters operation has been borne out by a doubling of the turnover last year and demands from the big tobacco companies that it build a second plant to ensure security of supply and satisfy new demand. AFC will meet that need without the need for expensive start-up costs, while enhancing Bunzl's US market share with an already high-margin business.
It is less immediately clear what adding more plastics to the group in the US will do. Bunzl already makes plastic caps and plugs to protect machinery and the like, a business which does not appear to fit neatly with AFC's precision extrusion arm, whose products go into end uses ranging from fencing to electronics. But Anthony Habgood, Bunzl chairman, says the technology is similar.
He also strenuously denies that there is any black hole at AFC which has caused WBT, the trust-controlled group which mounted the original bid, to pull out. And although the cost savings for Bunzl are likely to be small, analysts are pencilling in a pounds 4m-pounds 5m full-year enhancement to the bottom line as a result of the deal, plus earnings enhancement. Profits are likely to get a beating from the pound this year, but are still expected to rise to pounds 120m, putting the shares on a forward p/e ratio of 12, which looks reasonably attractive.