Plastics Capital plc, a British-based holding company that owns four plastics business, has announced it will buy Flexipol Packaging Ltd., a flexible packaging firm, for 10.64 million pounds ($16.9 million).
The deal will be part funded by the placing of 5.1 million new shares in the London-headquartered Plastics Capital, which aims to raise around 5 million pounds ($7.9 million), plus a 5 million pound extension of an existing facility with Barclays, Plastics Capital's bank, and 500,000 pounds ($799.6 million) from the firm's existing cash reserves.
Flexipol, which has 100 employees, was set up 20 years ago and is owned by its three founding shareholders, who are also directors of the business. It is based in Rossendale, England.
The group makes packaging products such as film and bags, supplying food processors and manufacturers, including Marks & Spencer, as well as animal feed manufacturers.
It generated nearly 15 million pounds ($23.9 million) in sales last year and pre-tax profits of 1.1 million pounds ($1.7 million).
Plastics Capital said Flexipol operated in a growing market place, citing a recent report which said the U.K. food and grocery sector would grow in value by 21 percent by 2018, 4.9 percent a year, while the animal feed market was estimated to grow by 2.9 percent annually until 2020.
Faisal Rahmatallah, chairman and chief executive of Plastics Capital, said Flexipol was “very clearly a business that meets our acquisition criteria — specialty products, high recurring revenues with loyal customers, limited competition and healthy financial performance.
“This acquisition meets our criteria. It is complementary to our Palagan operation and this should enable us to extract significant synergies in due course through cross selling, operational efficiencies and raw material cost savings.”
Palagan Ltd. is a polyethylene blown film manufacturer. Other Plastics Capital holdings are C&T Matrix Co., gear maker BNL Co. and extruder Bell Plastics.