Australian packaging giant Pact Group has bought one of its customers for A$80 million (US$61 million).
Melbourne-based, publicly traded Pact Group Holdings Ltd. has bought Jalco Group Pty. Ltd., which is headquartered in Prestons, Australia.
Jalco has six plants in Australia's New South Wales, and supplies contract manufacturing and filling services to big brand owners in the fast-moving consumer goods (FMCG) sector.
Pact's Chief Financial Officer Darren Brown said Jalco makes high density polyethylene and polypropylene bottles, but buys other packaging materials from Pact and other suppliers. It spends about A$10 million (US$7.6 million) a year with Pact, so is not a “top 10 client.”
Brown said once the purchase is finalized, Pact will assess Jalco's operations plant-by-plant to “get an understanding of the business and look at the optimal way to run it.” He could not yet say whether there would be any amalgamations with existing Pact operations.
“We don't have the keys to the front door yet,” he said.
Jalco was established in 1973 and has annual sales of about A$165 million (US$126 million). Its largest divisions are homecare and personal care. It also has automotive and promotional packaging divisions.
A Pact statement to the Australian Stock Exchange said Jalco employs about 500, and that Jalco's owners will retain the company's health and wellness division. Brown said that is a smaller pharmaceutical division not related to any Pact operations.
Jalco products include washing powders, shampoos, sunscreens, automotive fluids, plastic bottles and diet supplements for major global brands. It packages the products in PET and HDPE bottles, pumps and closures, shrink and stretch-wrap plastics, polypropylene trays, and other packaging materials.
Pact expects the sale to be finalized by Sept. 1.
Pact Group CEO Brian Cridland said Jalco is “an adjacent and highly complementary business to the Pact Group enterprise”.
“We have been a supplier to Jalco for many years. We understand the business and I am delighted to see these two businesses come together,” he said.
“Jalco is an ideal strategic fit as it will allow us to deepen our existing FMCG customer relationships and enter new areas of growth serving customers in outsourced contract manufacturing and packaging.”
Pact Group's manufacturing operations include blow molding, injection and compression molding, and automated assembly processes of plastic packaging and components.
It currently has 39 manufacturing plants in Australia and another 23 across New Zealand, China, the Philippines and Thailand. It has 2,200 employees in Australia, 900 in New Zealand and 400 in Asia. Annual sales are more than A$400 million (US$306 million).