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January 30, 2012 01:00 AM

Will 3rd takeover bid be lucky for Pact?

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    Melbourne-based Pact Group Pty. Ltd. is seeking approval from Australia's competition watchdog for its third takeover attempt of rival firm Viscount Plastics Pty. Ltd.

    The latest proposal prompted the Australian Competition & Consumer Commission to launch an inquiry into whether the acquisition will lessen market competition.

    Preliminary findings in a statement-of-issues document identified areas of “overlap” in Pact and Melbourne-based Viscount's operations that the ACCC suggests may lessen competition, including manufacturing and supplying polypropylene and high density polyethylene injection molded pails and cartridges, and PET beverage bottles in western Australia. The cartridges are tube-shaped containers that package and dispense adhesives, lubricants and sealants, including glue or filler guns commonly used in the building trades.

    ACCC launched a public review of the proposed acquisition Oct. 4, after receiving a submission Oct. 3 from Pact seeking clearance for the purchase.

    ACCC performed two public reviews, in April 2008 and April 2009, on Pact's proposed purchase of Viscount. Each time, both companies discontinued the sale process after ACCC released its preliminary concerns.

    Viscount is a division of the global packaging and materials-handling company Linpac Group Ltd. of Knottingley, England. It manufactures rigid plastic containers, food packaging, materials-handling equipment and lubricant packaging. It has operations in Australia, New Zealand, China and Malaysia.

    Pact manufactures plastic products for the food and retail industries, including PET bottles and containers, plastic closures and plastic crates. It also manufactures larger containers for industrial applications, including plastic pails, cubes, drums and jerrycans.

    Part of ACCC's inquiry involves investigating corporate and family links between Pact and another packaging company, Melbourne-based Visy Industries Pty. Ltd.

    Pact is controlled by Raphael Geminder, whose wife, Fiona, is the daughter of former Visy Chairman Richard Pratt, who died in 2009. Visy is still owned by the Pratt family through a family trust. The CEO is Anthony Pratt, Richard's son.

    ACCC is concerned Pact's key competitor in supplying injection molded PP and HDPE pails in Australia would be lost. Pact and Viscount are two of the three largest domestic pail manufacturers. Together with National Can Industries Ltd., they account for more than 60 percent of sales by revenue.

    ACCC also is concerned the proposed sale may remove or mute actual and potential competition between western Australia's PET bottle suppliers.

    ACCC said Pact, Viscount and Visy are the only PET bottle suppliers to third-party customers in western Australia. Visy and Viscount both manufacture PET bottles in western Australia, but Pact's current market involvement is minimal. The competition watchdog said the sale could directly transfer Viscount's market share to Pact.

    There also are concerns the sale could lessen competition for HDPE and PP cartridges in the building industry by combining the only two significant domestic suppliers.

    The public had until Dec. 15, 2011, to comment on the ACCC's preliminary findings. A final report was to be released in January.

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