The recently listed Close the Loop Group (ASX: CLG) is firmly on the acquisition trail. Hot on the heels of its purchase of Oceania Agencies, the company has now bought the Sydney-based bulk packaging business, Crasti & Co.
With the purchase of 100 per cent of the assets of Crasti & Co, end-to-end packaging and recycling solutions provider Close the Loop has strengthened its position in the bulk packaging market. This acquisition, the second in quick succession since the company’s listing on the ASX in November last year, follows the purchase of Oceanic Agencies, a commercial and bulk seafood packaging supplier in December.
Crasti & Co, established 25 years ago and achieving an annual sales growth of almost 30 per cent since 2017, is a supplier of flexible intermediate bulk containers (FIBCs) – large woven polypropylene bags – and other bulk packaging to food manufacturing, construction, and primary industries.
Described as having a “sticky client base”, Crasti & Co supplies multinationals, national corporates, and major government departments Australia-wide across a diverse industry base, with no single client representing more than 6.3 per cent of total annual sales.
The $5.85m acquisition has been funded from Close the Loop’s recent Initial Public Offering, which raised $12 million.
The deal is expected to significantly boost the company’s sales revenue and profitability. The company anticipates it will add approximately $2.78 million in gross profit on a proforma statutory FY22 basis; and it will be immediately earnings per share accretive, adding 16 per cent to EBITDA on an FY22 annualised basis.
Strategically, it delivers on Close the Loop’s stated intent to grow through acquisition in the niche packaging sector.
Speaking to PKN as the deal was announced, CEO Joe Foster said this move was a “logical next step” that allows Close the Loop to expand into the lucrative bulk packaging sector.
“It’s an ideal packaging bolt-on that provides us with a highly complementary market space and product suite to our existing packaging offering,” Foster said.
“Crasti & Company not only gives us ownership of a leading Australian FIBC provider, but also provides strong sales growth and profitability and a diverse suite of well-established and loyal clients.”
In line with the company’s circular economy model, Foster confirmed Close the Loop's intention to create a take-back programme for FIBCs, noting that recycled polypropylene is a highly sought-after material in this market.
Foster also said that Close the Loop is forging ahead with plans to invest in a washing and separation plant at the Melbourne Close the Loop facility.
“We’ll be looking to leverage the expertise of the Close the Loop directors in setting up successful take-back programmes for other materials,” Foster said, adding that since the listing, the group has fielded numerous enquiries from companies interested in setting up take-back programmes for various materials.
He said that when it comes to soft plastic, Close the Loop remains a fervent supporter of the REDcycle take-back programme. Currently soft plastic collected via RedCycle is recycled at the Melbourne Close the Loop facility.
Looking ahead, Foster said that Close the Loop Group has its sights set on further acquisitions that are a strategic fit with the company’s niche packaging and circular economy pursuits.
