Shares of packaging heavyweight, Pact Group Holdings Ltd (ASX: PGH), jumped 0.5% higher today on the back of a positive acquisition update this morning.
In an announcement to the ASX, Pact Group said it has entered into an agreement to acquire Jalco Group, a leading supplier of outsourced manufacturing and filling in the non-food Fast Moving Consumer Goods (FMCG) sector.
Established in 1973, Jalco has grown into a company which employs 500 people and last year achieved sales of $165 million.
Pact Group said it'll pay a total price of $80 million for Jalco, which equates to an EBITDA (earnings before interest, tax, depreciation and amortisation) of roughly 6.5 times.
The acquisition will be subject to customary conditions, and be funded from Pact Group's debt facilities.
Pact Group says the Jalco deal will be immediately earnings per share accretive and will produce a return on investment of 20% within three years.
"We are extremely excited about the Jalco acquisition, an adjacent and highly complementary business to the Pact Group enterprise," Pact Group CEO, Brian Cridland, said. "We have been a supplier to Jalco for many years, we understand the business and I am delighted to see these two businesses come together."
Since listing on the ASX in late 2013 Pact Group shares have rallied more than 32%, far outperforming the 6% return of the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
