AUSTRALIA – IVE Group has announced that it has signed a binding agreement to acquire 100% of the packaging company, JacPak, for a total purchase price of A$35 million (US$22m).
Based in Melbourne, JacPak is a prominent player in the Australian packaging sector, specializing in short to medium-run-length packaging.
The strategic acquisition will further expand and diversify IVE’s integrated service offering, which encompasses Creative Services, Data-Driven Communications, e-commerce, Brand Activations, Premiums & Apparel, Print, 3PL, Household Distribution, and Integrated Marketing services.
The agreement is subject to the satisfaction of standard conditions and is scheduled to be completed on October 31, 2023.
“Over the last two years, we have communicated our strategic intention to enter the short to medium-run folding cartons segment of the Australian packaging sector,” said IVE CEO Matt Aitken.
“We are pleased to announce our acquisition of JacPak, a highly regarded and profitable market leader in the sector. This acquisition serves as a strong entry point for us into the industry.”
The current owner of JacPak, Ashley Tomlin, who will remain with the business post-completion, said, “This marks a significant and positive new chapter for JacPak – a successful and thriving operation that we have grown over the past few decades.
“I have no doubt that the business will continue its innovative, customer-centric approach as part of IVE. I am genuinely excited about the potential and opportunities that lie ahead for both staff and customers.”
After conducting an investigation into specific segments of the Australian packaging sector, IVE has determined that fiber-based packaging is a suitable addition to the Group’s current product and service offerings. This decision aligns with the company’s long-term strategy of diversifying its business into related adjacencies.
The fragmented structure of this sector also provides an opportunity for IVE to play a leading role in further consolidating the sector, similar to the successful strategies they have executed in other related areas over the last decade.
JacPak will continue to operate as a standalone business, with the combined teams working closely together to increase revenue by cross-selling IVE’s wide range of products and services to the existing JacPak customer base.
Based on FY23 revenues of A$45 million (US$28.56m), the acquisition is expected to have a positive impact on earnings in FY24.
Following the realization of synergies, the business is expected to deliver an EBITDA of approximately A$8.4 million (US$5.33m) and an NPAT of around A$3 million (US$1.90m), giving rise to EPS accretion of approximately 7 percent (relative to the mid-point of the Group’s FY24 NPAT guidance).
Post the realization of synergies, this represents a 4.2x multiple on the purchase consideration of A$35 million (US$22.22m) (including A$4 million (US$2.54m) payable as deferred consideration subject to the achievement of performance hurdles over 12 months).
