Pact Group is selling half of its Crate Pooling business to Morrison & Co, a global infrastructure investment manager, in a bid to expand capabilities and boost reusable plastic crate operations.
The acquisition will create a new joint venture with Morrison, which will be 50 per cent owned by Pact and operated as a separate entity.
As part of the deal, Pact will receive $160 million in cash proceeds from the sale net of costs and tax, along with a further earn out of $20 million, reflecting an enterprise value of $380 million for the business unit.
Currently making up part of Pact’s Reuse division, the Crate Pooling unit manages an asset pool of reusable and recyclable plastic crates and folding produce bins used by retailers in Australia and New Zealand in their fresh produce supply chains.
The business unit manufactures the crates and bins in Australia and operates a network of wash and distribution facilities that keeps them circulating in a loop from suppliers to retailer distribution centres and into supermarkets.
“We’ve been seeing increased demand from customers for a rapid scale-up of our Crate Pooling offering as they look to operate more efficiently and sustainably in the circular economy. This new strategic partnership with Morrison & Co is a great outcome for our customers as it will accelerate the growth of the business and offer an expanded range of products and service, with Pact sharing in the upside,” said Sanjay Dayal, chief executive officer and managing director of Pact.
The Crate Pooling business recently extended a contract with Woolworths for 10 years and seeks to expand its usage from 50 million to 80 million crates a year by 2025. It also signed a long-term contract extension with ALDI Australia.
Proceeds from the transaction will enable Pact to reduce debt and accelerate investment in the plastic recycling and packaging businesses, which is central to its circular economy strategy, Pact Group said in a media release.
The transaction is expected to be completed by the end of 2024.
