The deal means Colorpak will enter the NZ market through the acquisition of Carter Holt Harvey’s (CHH) Auckland manufacturing operation. The deal also includes CHH subsidiary Montage Graphics, a pre-press company that services CHH’s carton and corrugated businesses, as well as the trade.
Colorpak will acquire all the operating assets and assume all of the operating liabilities of CHH’s folding carton business, including plant and equipment, working capital, premises leases and all employee entitlements, for a net consideration of $5m.
The deal, which will be funded by existing cash and debt facilities, is expected to be completed by “late 2010 or early 2011”, subject to ACCC approval.
Colorpak said the acquisition would increase its annualised revenues by $80m to $250m, as well as driving base EBITDA earnings to around $16.5m.
Colorpak managing director Alex Commins told ProPrint the acquisition would vastly increase the company’s presence in the fast food packaging market, as the company looks to broaden its customer base in the interest of reducing its dependence on a few major clients.
He added that the expansion into New Zealand was a “natural extension” for the company.
“As a public company, Colorpak is always on the look-out to take the next growth steps,” he said.
“We maintain a dialogue with all the industry players, and have now found these guys are in a position to relinquish those assets.”
Colorpak said it would now “undertake a thorough review of operations”. Colorpak operations manager Paul Commins will lead an ‘integration team’ to “oversee the integration process and any consolidation activities”. The integration process is expected to be completed within two years.
Alex Commins emphasised to ProPrint that the deal is only at the heads of agreement stage, and that the company will need to complete due diligence and obtain ACCC approval before it begins “fine-tuning” its integration plan.
The heads of agreement also mandates that Colorpak continue to acquire board from CHH for current customers for a minimum of two years. Colorpak and Reynolds Group Whakatane Mill have entered into an agreement for the supply of folding carton board on “competitive commercial terms”.
CHH’s folding carton business has five plants and 658 employees based in Melbourne, Sydney and Auckland.
For the year to 31 December 2009, CHH had sales of $170m and EBITDA earnings of approximately $4m, as well as net operating assets in excess of $70m.
Earlier this year, Colorpak acquired Sydney-based Remedies Print out of administration for $400,000.
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