Australia's Advent sells Integrated Packaging to Pro-Pac

As part of the transaction, Advent and IPG management will receive 158.4 million shares in Pro-Pac at A$0.379 apiece for a total consideration of A$60 million. Pro-Pac will finance the rest of the deal by raising A$54.8 million in new equity and taking on A$70 million in additional debt, according to a filing. The vendors will hold a 28.2% stake in Pro-Pac following the issuance of new equity and Rupert Harrington, executive chairman of Advent, will join the company’s board.

“The acquisition of IPG represents a significant milestone in the realization of Pro-Pac’s vision to become the preeminent flexible and industry packaging manufacturer and distributor in Australia. The opportunity to combine two very complementary businesses will deliver significant long-term value to Pro-Pac shareholders,” said Ahmed Fahour, chairman of Pro-Pac.

IPG is Australia’s third-largest flexible packaging provider, specializing in shrink film, stretch film, pallet wrap film, and agricultural film products. It also distributes pallet wrapping machines and related equipment. Advent invested in the business in 2008, facilitating an exit for several existing shareholders and supporting the acquisition of Amcor Flexibles’ manufacturing plant in Perth.

The private equity firm provided two more rounds of follow-on funding in 2011 and 2013. The first enabled IPG’s last remaining shareholder from before Advent’s investment to cash out, and the second went towards the purchase of three more plants from Amcor Flexibles, expanding the company’s product range in the process. Pro forma EBITDA came to A$18.1 million in the 2017 financial year, up from A$12.7 million in 2016.

Pro-Pac provides flexible and rigid packaging solutions to a range of blue chip clients. It generated A$229.2 million in revenue for the 12 months ended June 2017, down from A$240.8 million the previous year. Over the same period, EBITDA dropped to A$12.2 million from A$15.3 million while net profit fell to A$5 million from A$6.9 million.

The EBITDA of the merged entity is expected to reach A$37.7 million in 2018, including A$2 million from business synergies.

Advent invests in companies with enterprise values of A$20-150 million, typically writing equity checks in the A$15-50 million range. The GP is in the process of trying to merge another portfolio company, outside school hours care business Junior Adventures Group, with Bain Capital-owned Camp Australia. The deal is being reviewed by Australia’s competition regulator.

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• Topics
• Australasia
• Industrials
• Trade sale
• Australia
• Advent Partners
• M&A
• Exit
• manufacturing