Plastic packaging manufacturer Pact Group has signed an agreement to take over Jalco Group for a total consideration of close to $80m.
The Jalco Group is a FMCG contract manufacturer for well-known brands such as Sunsilk, Avon, Colgate and Ajax.
Melbourne-based Pact chief executive Brian Cridland said Jalco was "an ideal strategic fit" which allowed the group to deepen its existing customer relationships and enter new areas of growth.
Jalco, which operates out of Prestons, Hornsby, Smithfield, Lurnea and Silverwater in Sydney, has trailing annual sales of around $165m and employs close to 500 workers.
Pact said the acquisition costs were likely to total around $1m this financial year and would be funded through Pact's debt facilities.
The price of the deal represents a multiple of approximately six and a half times earnings before interest, tax, depreciation and amortisation.
The takeover is expected to take place no later than the start of September, subject to a restructure of Jalco to retain its health and wellness arm.
BW Equities executive director Benjamin Kay said similar acquisitions could be expected by Pact Group in the future.
“Acquisitions are expected to remain a growth driver during the coming three years,” said Kay in a 17 June 2015 BW Equities Report for investors.
The report also indicates that Asia is likely to be a gateway of expansion for the Pact Group.
“Australia and New Zealand are mature markets, but the company has an emerging presence in the higher growth markets of Asia,” he said.
“The company has grown quickly via acquisitions, so it is difficult to gauge the underlying organic growth of the business,” said Kay
Melbourne-based Pact Group was established in 2002 and today has a presence in Australia, New Zealand and numerous Asian markets. Among Pact’s biggest clients are Woolworths and Coles private label brands, as well as various divisions of Unilever and other major multinationals.
