The acquisition of Synpac in Hessle was part of Plastics Capital’s strategy to grow shareholder value by acquiring similar plastic products businesses.
Upon completion of the acquisition, £2.79M will be paid in cash. A deferred payment of £0.31M will be paid 12 months following completion, subject to there being no warranty claims.
The acquisition to boost earnings by the end of its first full financial year following the completion of the sale, said Plastics Capital.
Plastics Capital had tracked the performance of Synpac for the past three years, it said. The company was acquired from its founder, who will retire after a handover period.
High levels of recurring business
Synpac had a loyal customer base with high levels of recurring business, according to its directors.
Plastics Capital said Synpac fitted well with the company’s films division – Palagan and Flexipol Packaging, which manufacture packaging for the food industry.
Chairman of Plastics Capital Faisal Rahmatallah said: “Synpac is a business that meets our acquisition criteria, namely speciality products, high recurring revenues with loyal customers, limited competition and healthy financial performance.
“It is complementary to our other Films Division businesses and this should enable us to achieve significant synergies in due course through cross selling, operational efficiencies and cost savings.”
Food processing industry
Established in 1984, Synpac is a manufacturer of high barrier, flexible packaging – including vacuum bags and pouches – for the food processing industry.
It generated revenues of £4.4M and statutory profit before taxation of £0.8M in the financial year ending May 31 2015.
Meanwhile, Activia yogurt maker Danone has bought US-based organic dairy company WhiteWave Foods for £9.6bn earlier this month (July 7).
It agreed an all-cash deal worth £43.36 per share. Danone said the deal “doubles the size of [its] US business”. It would make Danone the world’s biggest producer of organic food.