M&As: Pact acquires Pascoe; Avery Dennison buys Chinese company Yongle Tape

Australian rigid packaging giant Pact Group Holdings is acquiring speciality contract manufacturer, Pascoe, for A$41 million. The acquisition price represents a multiple of 6.5 times historical EBITDA. Completion is expected to occur end of February, subject to customary conditions.

Pascoe is one of Australia’s largest manufacturers of aerosol and liquid based consumer products within the household and industrial chemicals category. Its products include cleaning, pesticides, air care, personal care and aerosol based food products. It is Australia’s largest manufacturer of aerosol cooking oil. Sydney-located Pascoe’s manufactures both branded and private label products on behalf of key customers, in addition to the manufacture and distribution of a number of owned brands.

Pact Group’s Managing Director/CEO, Malcolm Bundey, said, “The acquisition of Pascoe’s is strongly aligned with our recent growth in contract manufacturing and significantly enhances our product and service portfolio. It also extends our capability within liquids filling, providing alignment with our Jalco business.”

Pact’s half year profit after tax before significant items was A$52.9 million, up 15%, compared to the prior corresponding period.

The acquisition of Pascoe further expands the group’s investment in specialised contract manufacturing following the recent acquisitions of Jalco and Australian Pharmaceutical Manufacturers. The Pascoe deal will mean 20% of the group’s revenues are now generated from contract packaging, which also allows Pact to diversify from the dairy food and beverage sector, which represents up to 50% of group revenues.

Pact employs more than 4,000 people across its business and produces more than 8 billion units of packaging annually.

Meanwhile, US-headquartered labelling solutions provider Avery Dennison is acquiring Chinese manufacturer of speciality tapes and related products used in a variety of industrial markets, including the global automotive industry, Yongle Tape, for the purchase price of US$190 million.

Headquartered in China’s Hebei Province, with production facilities in Zhuozhou and Shanghai, Yongle Tape is China’s leading manufacturer of cable harnessing and PVC insulation tapes. The company is a key supplier to both Chinese and global automakers, with a portfolio of high-value products that are specified by the automotive OEMs and their Tier suppliers Over its 32-year history, Yongle Tape has built its strong market position and generated revenue of an estimated RMB1.1 billion, or approximately US$160 million.

“Yongle Tape will build on our position in the global automotive sector and strengthen our overall product offerings with a range of industrial customers,” added Mike Johansen, vice president and general manager of Avery Dennison’s Industrial and Healthcare Materials businesses. “And with its solid foundation and strong legacy of growth, Yongle Tape will be an excellent fit with our global tapes and fastener businesses—we see many attractive opportunities to innovate and expand the existing product range and customer base of both organizations.”

The acquisition is expected to close in mid-2017, subject to customary conditions and regulatory approvals.

Avery Dennison is a global leader in pressure-sensitive and functional materials and labelling solutions for the retail apparel market. With operations in more than 50 countries and more than 25,000 employees worldwide, Avery Dennison serves customers in the consumer packaging, graphical display, logistics, apparel, industrial and healthcare industries. Headquartered in Glendale, California, the company reported sales of US$6.1 billion in 2016.

(PRA)