ASX-listed Pro-Pac Packaging, chaired by former Australia Post boss Ahmed Fahour, has announced a $177.5 million merger deal with flexible packager Integrated Packaging Group (IPG).
‘Significant milestone’: Pro-Pac chairman Ahmed Fahour
“The acquisition of IPG represents a significant milestone in the realization of Pro-Pac’s vision to become the preeminent flexible and industrial packaging manufacturer and distributor in Australia,” said Fahour. “The opportunity to combine two very complementary businesses will deliver significant long-term value to Pro-Pac shareholders.”
The combined business will have annual sales of more than $450 million.
The merger will be funded through a combination of $60 million Pro-Pac shares issued to the vendors, a $54.8 million fully underwritten equity raising and $70 million from a new debt facility, the company told the ASX in its announcement.
Pro-Pac has distribution facilities in Sydney, Melbourne, Brisbane, Perth and Adelaide as well as six manufacturing sites, providing flexible and rigid packaging solutions.
Integrated Packaging Group, formerly owned by private equity firm Advent Partners, operates five manufacturing facilities across Australia and New Zealand, providing a wide range of stretch plastic film used to wrap consumer goods, building products and agricultural products.
The new entity will operate 22 distribution warehouses and manufacturing facilities in Australasia.
Pro-Pac CEO Grant Harrod, who will head the merged group, says the combination of Pro-Pac and IPG provides “many exciting opportunities” in the growing Australian flexibles packaging market.
“Pro-Pac’s expanded capacity to manufacture and distribute high quality products will delight our customer base and provide us with a one-stop-shop offering. Pro-Pac will be a world class manufacturer without geographic constraints as we increase our offerings in key areas such as food service and agriculture film.”
The deal is conditional on Pro-Pac shareholder approval, the completion of the $54.8 million raising and conditions related to the debt facility.
Pro-Pac last month reported a five percent fall in FY17 revenue to $229 million, with profit after tax diving 28 percent to $5.02 million.
Former Australian Post CEO Fahour has been chairman of Pro-Pac since 2015.
| A Print-21 release || September 13, 2017 |||