Graphic Packaging International to acquire Colorpak for $60m

Colorpak confecrtionery clients include Nestlé, Cadbury, Lindt & Ballantyne

Graphic Packaging International, part of Graphic Packaging Holding Company, has agreed to buy Colorpak, a folding carton supplier in Australia and New Zealand for $60m, with the deal expected to close in Q2, 2016. 

Colorpak shares have reportedly risen nearly 30% after the deal was announced.

Clients include Nestlé, Cadbury, Lindt & Ballantyne

The company employs 580 staff and has three folding carton facilities in Melbourne, Sydney, and Auckland that convert approximately 38,000 tons of paperboard a year into folding cartons for the F&B (food, confectionery, wine) and consumer product sector.

Michael Doss, president/CEO, Graphic Packaging, said as part of its US and Europe strategy, it wants to grow its global supply chain across the developed food and beverage end markets. It’s latest acquisition was Benson Group in the UK.

In addition to manufacturing folding cartons, it makes unbleached paperboard, coated recycled board, microwave packaging and machinery.

While Graphic Packaging currently has a well-established presence in Australia, the acquisition of Colorpak and its three folding carton manufacturing facilities allows us to expand our supply chain in the Australia and New Zealand food, beverage and consumer product markets,” he said.

This acquisition will broaden our customer base and offer current customers a wider range of products."

A spokesman for Colorpak said it had entered into a Scheme Implementation Deed (SID) with Graphic Packaging, whereby if the scheme proceeds, Colorpak shareholders will receive $0.68 cash per Colorpak share including any dividends declared by the company after the announcement.

Colorpak’s Board intends to declare total dividends of up to $0.11 per share including a fully franked dividend in respect of the half year ending December 31, 2015 and, subject to the Scheme being approved and finalisation of funding, a fully franked special dividend.

The Colorpak directors unanimously recommend that Colorpak shareholders vote in favour of the Scheme in the absence of a better proposal.

Colorpak’s founding Commins family, which together hold 32% of total issued shares, claim they will vote in favour of the Scheme and has appointed BDO Corporate Finance as an independent expert, which is expected to give shareholders its report by late February.

Negotiations were 'in the works for a few years'

Geoff Willis, chairman, Colorpak, said the deal had been 'in the works for a few years' but wasn't taken seriously until his counterpart at Graphic Packaging, David Scheible, visited Australia and Colorpak's factories in January.

Alex Commins, the current managing director, Colorpak, and Sid Troiani, CFO, will remain in their roles and assume responsibility for Graphic Packaging International’s growth ambitions in Australia and New Zealand.

Colorpak and Graphic Packaging International have partnered to provide packaging in Australia and New Zealand for close to a decade. This acquisition combines Colorpak’s folding carton capabilities with Graphic Packaging International’s global expertise and will enhance our ability to serve all customers in this market,” said Scheible.

Graphic Packaging Holding Company will release its fourth quarter and full year 2015 results on Tuesday, February 9, 2016. 

 

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