In a move that signals its intentions to expand its Asia Pacific operations, SIG is set to acquire Visy Cartons from Visy Pak Operations, a subsidiary of Pratt Consolidated Holdings, for $70 million.
Visy Cartons, a leader in the Australian beverage carton market, will become part of SIG’s business in the Asia Pacific region when the deal, subject to customary conditions being met, closes during the fourth quarter of 2019.
SIG, a leading systems and solutions provider for aseptic carton packaging, and Visy Cartons have enjoyed a long-standing partnership, with Visy holding the licence to produce SIG aseptic cartons for sale in the Australian and New Zealand markets. Visy Cartons places SIG filling machines with customers under long-term contracts supported by a strong local service organisation.
In fiscal year ending June 2019, sales of SIG cartons accounted for 80 per cent of Visy Cartons $84m revenue. Most of that was in Australia, as the company still has a limited presence in New Zealand. SIG has plans for this to change, eyeing New Zealand as a market in which to expand its footprint.
Adam Lipscomb, current GM of Visy Cartons, will retain his leadership position in the business.
For Visy Cartons, there are significant synergies to be realised through supply chain optimisation and access to SIG’s latest technologies and solutions.
The ANZ market for aseptic beverage cartons has a projected 3% CAGR over the next five years. The key growth driver is investments in dairy processing and packaging for the export of aseptic milk to China and other Asian countries.
According to SIG, the acquisition of Visy Cartons will enable the group to provide further support to its existing customers in Asia who have invested into, or partnered with, players in Australia and New Zealand.
For the export of liquid dairy products, SIG’s aseptic carton technology offers long shelf life, efficient logistics and differentiation potential.
In China in particular, demand for premium milk imported from Australia and New Zealand is expected to grow by around 7% CAGR over the next five years. SIG is already strongly positioned in the Chinese market, with an expanding local manufacturing presence and a newly opened regional Tech Centre.
Commenting on the agreement, Lawrence Fok, president and GM of SIG Asia Pacific said: “We are very pleased to welcome the management and employees of Visy Cartons to SIG after many years of collaboration. Visy has an excellent team with a proven track record and together we will work to ensure that customers in Australia and New Zealand enjoy excellent service and access to our leading technologies. We plan to leverage our broad product portfolio to tap into the New Zealand market.”
Visy Cartons GM Adam Lipscomb said: “We are delighted at becoming a member of the SIG family and are looking forward to pursuing growth opportunities from a strengthened position with expanded product and geographic opportunities.”