AUSTRALIA – Victoria-based investment company, Kin Group has launched an A$234 million (US$150.57m) takeover bid for Australia’s largest packaging company, Pact Group Holdings.
Through its subsidiary, Bennamon Industries, Kin Group plans to offer an all-cash deal of A$0.68 cents (US$0.48) cash per share for all ordinary shares in Pact Group.
Kin Group already holds a controlling interest of more than 50 percent in Pact, making it highly unlikely that a competing offer will emerge.
Additionally, Kin Group intends to delist Pact from the ASX when feasible, believing that private ownership is the best path for Pact’s success.
In a statement, Kin said: “Kin Group has every confidence in Pact and its employees. However, Kin Group considers that success for Pact is best achieved under private ownership without the additional costs, market volatility and complexities of being an ASX [Australian Stock Exchange] listed company.”
Operating since 2002, Pact specializes in developing tailored packaging solutions using locally sourced recycled content.
It mainly operates in its home country, Melbourne, along with New Zealand, Asia, the US, and the UK, and services both the consumer and industrial sectors.
The company has been struggling as of late due to supply chain disruptions, inflationary pressures, fluctuating resin prices, labour constraints, and macroeconomic uncertainty within the country.
Macquarie Capital and Ashurst acted as financial adviser and legal adviser to Kin during the process, respectively.
Last month, Pact signed an agreement to divest 50% of its Crate Pooling business to global infrastructure investment manager Morrison & Co.
The transaction will see the formation of a new joint venture with Morrison which will be 50% owned by Pact and operate as a separate entity.
Pact will receive approximately A$160 million (US$102.94m) in cash proceeds from the sale net of costs and tax and can receive a further earn out of A$20 million (US$12.87m), reflecting an enterprise value of A$380 million (US$244.48m) for the business.
The Crate Pooling business, which is currently part of Pact’s Reuse division, manages an asset pool of reusable and recyclable plastic crates and folding produce bins used by retailers in Australia and New Zealand in their fresh produce supply chains.
The business manufactures the crates and bins in Australia and operates a network of wash and distribution facilities that keeps them circulating in a loop from suppliers to retailer distribution centers and into supermarkets.
The business recently extended its crate pooling contract with Woolworths by 10 years and plans to scale up usage from 50 million to 80 million crates a year by 2025. The business has also secured a long-term contract extension with ALDI Australia.
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