Investment bank Citi has been hired for the sale of Pact Group’s contract manufacturing division.
It is estimated that the division could be worth about $200 million and will appeal to private equity firms and offshore players.
The company confirmed its plans on Tuesday to sell the division, which is a dominant supplier of contract manufacturing services in Australia for the home care, personal care and health and wellness segments.
It came after DataRoom flagged on August 20 that a sale of the business was on the agenda.
The business was created through acquisitions and includes the combined businesses of Jalco, Pascoe’s and Australian Pharmaceutical Manufacturers.
Contract manufacturing reported sales of $372m for the 2019 financial year and earnings before interest, tax and depreciation of $25m.
The sale follows a strategic review of the business and portfolio by Pact.
“Contract manufacturing is an attractive business that enjoys leading positions in sectors with strong growth potential,” said chief executive Sanjay Dayal.
“Pact’s success over the longer term is dependent on our ability to deliver organic growth and restore margins in the core packaging business while growing our materials handling and sustainability businesses.”
Mr Dayal said selling the business would simplify the Pact portfolio and sharpen the company’s focus on driving improved returns in the remaining group.
It would also strengthen the company’s balance sheet and improve financial flexibility.
Jarden to lobby for joint Australia-NZ share trading index
Growing concerns about liquidity on the Australia and New Zealand stock exchanges have prompted plans to lobby governments for a combined trans-Tasman share trading index.
Citi leads as block trades rule
Block trades dominated much of the equity capital markets activity in 2024, with Citi coming out on top with its role in a deal involving Goodman.