Pact agrees to acquire Jalco for $80m

16 June 2015 (Last Updated June 16th, 2015 18:30)

Australian packaging firm Pact Group has agreed to acquire FMCG contract manufacturing services supplier Jalco for approximately $80m.

Australian packaging firm Pact Group has agreed to acquire FMCG contract manufacturing services supplier Jalco for approximately $80m.

Pact had been in talks with Jalco, which was put up for sale last year, for several months.

Established in 1973, Jalco offers contract manufacturing service through five business divisions, including a creative centre for research and development, home care, personal care, automotive, and promotional packaging.

Jalco employs close to 500 people and generates $165m in annual sales.

"We are committed to a programme of sustained investment in the Jalco business to better serve our customers and enhance their competitive capabilities."

Pact Group CEO Brian Cridland said "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.

"Jalco is an ideal strategic fit as it will allow us to deepen our existing FMCG customer relationships and to enter new areas of growth serving customers in outsourced contract manufacturing and packaging.

"Pact has continued to lead the packaging sector in investment and innovation over the last decade and we are committed to a programme of sustained investment in the Jalco business to better serve our customers and enhance their competitive capabilities."

Subject to customary conditions and restructuring by sellers to retain the health and wellness division, the acquisition is expected to be completed by 1 September.

The acquisition is expected to be immediately EPS accretive and to generate return on investment of more than 20% within three years.

Pact employs approximately 3,500 staff and has operations across Australia, New Zealand and Asia. Founded by entrepreneur Raphael Geminder, Pact produces packaging from plastic and steel for the food, dairy, beverage, chemical, agricultural, industrial, and other sectors.