Speculation that Pact Group (ASX:PGH) is in talks to acquire manufacturing services provider Jalco has been confirmed on Tuesday. The packing manufacturer confirmed in a brief statement on Tuesday that it was indeed in discussions with Jalco, but that the talks were merely in the opening stages. Sources have told Street Talk that the deal could be worth up to $150m if it goes through. The business was put up for sale last year, led by the corporate advisory group Grant Samuel.
Jalco deals with Fast Moving Consumer Goods (FMCG) packaging and is seen as a welcomed addition to Pact Group. The publically traded company has been seen trying to increase its exposure into the FMCG sector. Pact is Australia’s largest plastics packaging manufacturer. It was listed on the ASX in 2013 with a market capitalisation of around $1.70bn. Its current market capitalisation sits around $1.24bn. Jalco, a much smaller operation, was founded in 1973 and produces goods for companies such as Unilever, Energizer and Castrol. Sources on the deal have said the company has been valued at around $150m.
The new acquisition is in line with previous deals made by Pact Group. Since its listing on the ASX, it has acquired Cinqplast, Plastop and Viscount China. Pact has sought to expand into the growing Asian markets since it became a publically traded company. The company released an announcement on Tuesday confirming the speculation. It went further to say “However, Pact confirms it has not entered into an agreement to acquire Jalco nor is there any certainty that it will acquire Jalco.” Shares of PGH are down 2c, or 0.48 per cent, at $4.19 per share around 3:24pm on Tuesday. PGH has advanced 25 per cent in the last 12 months but has fallen 3.45 per cent so far this year.
Author: Simon Herrmann
Jun 02, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.