The acquisition, on a cash and debt-free basis, is expected to be earnings enhancing in the first full financial year following completion.
Based in Hessle, Yorkshire, Synpac is a specialist manufacturer of vacuum bags and pouches for the food processing industry.
Plastics Capital’s directors believe that Synpac has a loyal customer base with high levels of recurring business due to excellent service and quality standards that have been maintained over many years. As such, they believe it fits very well with the company’s films division comprising Flexipol and Palagan. Flexipol, in particular, is a manufacturer of high barrier flexible packaging solutions for the food industry.
In the financial year ended 31 May 2015, Synpac generated revenues of £4.4m and statutory profit before taxation of £0.8m. The directors estimate that the normalised sustainable EBITDA of Synpac is circa £0.6m, after making suitable adjustment for the significant weakening of sterling post the recent referendum to leave the EU.
The business has been followed by Plastics Capital for the last three years and is being acquired from Synpac’s founder who will be retiring after an agreed handover period.
It is believed that there will be minimal integration risk and the enlarged packaging business can deliver organic revenue growth in addition to increasing the operating margins of the enlarged packaging business post the acquisition.
Faisal Rahmatallah, chairman of Plastics Capital, commented: “We are very pleased to announce the acquisition of Synpac Limited. Synpac is a business that meets our acquisition criteria, namely specialty 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.”
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