Private equity firms keen on Pact Group’s contract manufacturing division

Private equity firms are reportedly among interested parties in the sale of Pact Group’s (ASX:PGH) contract manufacturing division, with the first round of an auction expected to go ahead later this month.

The Australian Financial Review’s Street Talk column names Crescent Capital Partners, CPE Capital, Pacific Equity Partners and Adamantem Capital among interested parties, and said it understood that first round auction bids would be made on March 18. Binding bids are expected late in the year’s third quarter.

As reported by @AuManufacturing and others, Pact announced in January that it would put the contract manufacturing business up for sale, with Citigroup appointed as advisers. The division is worth an estimated $200 million, with revenues of $372 million and EBIT of $25 million last year. The move came after a strategic review by the company, which said its contract manufacturing division enjoyed strong growth potential – it operates in home care, personal care and health and wellness – was outside of a focus on its core packaging business, as well as materials handling and sustainability.

Pact will use the sale to pay down debt and fund growth and restructuring, including in the three business units listed above.

The news follows a major announcement on Monday by Pact at the National Plastics Summit at Canberra. Pact pledged that it and its partners would invest $500 million in recycling, promising significant investments in sustainable packaging, reuse and recycling initiatives and in technology and materials science capabilities to boost recycled content of packaging.

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