UK-based Plastics Capital has agreed to acquire packaging manufacturer, Flexipol Packaging, for a maximum consideration of £10.64m.
Based in Lancashire, Flexipol produces plastic packaging products like vacuum bags, block bottom tray liners, animal feed sacks and pallet covers among others.
The maximum cash consideration is based on £9.82m payable in cash on completion and £0.82m of earn-out payments which may be payable in cash based on certain Ebitda targets.
The company stated that the acquisition is expected to enhance its earnings in the first full financial year.
With the acquisition, Plastics Capital will also get access to Flexipol's existing complementary products and customers.
While the enlarged packaging business will mean near-term cost synergies from increased buying power, it will also present Plastics Capital with long-term cross-selling opportunities.
With four factories in the UK, Plastics Capital also has a plant in Thailand and sales offices in the US, Japan, China and India.
The company carries out most of its production work in the UK. However, it exports about 60% of its sales to about 80 countries across the world. Currently, the group employs about 350 employees.
Plastics Capital chairman and CEO Faisal Rahmatallah said: "Flexipol is very clearly a business that meets our acquisition criteria - specialty products, high recurring revenues with loyal customers, limited competition and healthy financial performance. It is complementary to Palagan and this should enable us to extract significant synergies in due course through cross selling, operational efficiencies and raw material cost savings.
"We are also very pleased to announce an oversubscribed £5m placing with both new and existing institutional shareholders, at a 4.4% discount, in order to part finance the Flexipol acquisition."
Image: Flexipol manufactures plastic packaging products like vacuum bags, block bottom tray liners, animal feed sacks and pallet covers. Photo: courtesy of Flexipol Packaging.