Australian packaging and recycling solutions provider Pact Group has signed a deal to sell 50% of its Crate Pooling business to Morrison & Co.

As per the terms of this transaction, Pact will receive approximately A$160m ($102.3m) in cash proceeds from the net sale of costs and tax.

The Australian company can further receive up to A$20m, reflecting an enterprise value of A$380m for the business.

The cash proceeds from this sale, according to Pact, will help it minimise debt and boost investment in its plastic recycling and packaging business, a key part of the company’s circular economy strategy.

The deal will involve infrastructure investment manager Morrison & Co and Pact establishing a new evenly split joint venture (JV).  

This JV will be operated as a separate entity.

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The closure of this deal is now subject to the fulfilment of certain customary conditions and approvals. It is expected to be completed later this year.

Pact CEO and managing director Sanjay Dayal said: “We have been seeing increased demand from customers for a rapid scale-up of our Crate Pooling offering as they look to operate more efficiently and sustainably in the circular economy.

“This new strategic partnership with Morrison & Co is a great outcome for our customers as it will accelerate the growth of the business and offer an expanded range of products and service[s], with Pact sharing in the upside.”

A part of Pact’s Reuse division, the Crate Pooling segment focuses on manufacturing and managing an asset pool of recyclable and reusable plastic crates and folding produce bins that are used by retailers across Australia and New Zealand in their respective fresh produce supply chains.

This unit also operates a network of wash and distribution facilities to keep the crates and bins in circulation from retailers’ distribution centres and finally to supermarkets.