- Pharmaceutical manufacturer and packer, Probiotec (PBP) will acquire Australian contract packer, Multipack-LJM, for $52.5 million
- Multipack provides packing services for the pharmaceutical, consumer healthcare, cosmetics, and food and beverage sectors
- Probiotec CEO, Wes Stringer, says this will benefit the business by expanding its customer reach and position Probiotec as the largest co-packer in Australia
- Additionally, the company will gain access to Multipack’s 30,000-square-metre warehouse capacity
- Probiotec will pay for the deal with $32.4 million in cash, an extra $7 million in shares and a contingent deferred consideration of $13.1 million over two years
- The acquisition is expected to be finalised by the end of the year
- Company shares are up a healthy 19.7 per cent to trade for $2.07
Probiotec (PBP) is set to acquire Multipack-LJM for an enterprise value of $52.5 million.
Multipack-LJM is one of Australia’s leading contract packers. It provides packing services for pharmaceutical, consumer healthcare, cosmetics, and food and beverage companies.
It has over 30,000 square metres of warehouse capacity which allows it to provide ‘clean room’ and cold-pack services and packing solutions.
The acquisition of this business will materially increase the company’s earnings and be highly-accretive. The acquisition will be around 40 per cent earnings per share (EPS) accretive based on a full year FY20 pro forma basis.
Multipack-LJM boasted strong financial results in FY20 having generated $70 million in sales revenue for the 12 months to June 30 2020. By this date, it also achieved a normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) of $12.6 million.
“This acquisition will give us significant critical mass and access to an amazing spread of global clients to offer our wide range of manufacturing and packing services,” Probiotec CEO Wes Stringer said.
Probiotec considers this deal to be highly compelling and beneficial for a number of reasons.
Multipack-LJM will help to scale up the company’s existing Sydney-based packing operations to create an Australian-leading operation with sales revenue expected to be roughly $100 million.
Once completed, the acquisition will position Probiotec as the largest co-packer in Australia and will expand its capabilities while keeping costs low.
Additionally, Probiotec’s customer reach will expand and so will its executive team. Multipack-LJM vendors will join Probiotec’s executive team to assist with driving business growth.
“We think the combination of the Probiotec and Multipack-LJM businesses will give us a world-leading manufacturing and packing platform to offer our valued customers,” Multipack-LJM Head of NSW Adam Rawson said.
Under the transaction, Multipack-LJM vendors will receive an upfront cash payment of $32.4 million as well as $7 million worth of Probiotec shares.
The transaction also includes a contingent deferred consideration of $13.1 million over two years.
The acquisition is expected to be completed by the end of the year.
Company shares are up a healthy 19.7 per cent to trade for $2.07 at 1:24 pm AEDT.