Australian packaging company Colorpak is going ahead with a plan to buy the folding carton making businesses, including a plant in Auckland, owned by Carter Holt Harvey after checking the books.
Carter Holt Harvey is owned by Graeme Hart's Rank Group and the New Zealand billionaire has been focusing on building a global beverage packaging business from the Carter Holt business he acquired from International Paper.
Colorpak said today it had completed due diligence and signed relevant agreements with Carter Holt Harvey to buy its folding carton businesses at Reservoir and Mount Waverley in Victoria, Villawood in New South Wales and in Auckland for AU$5 million (NZ$6.6 million).
The acquisition, which was first signalled in October, gives Colorpak entry into the New Zealand market via the manufacturing operation in Auckland.
The company has previously said that the businesses being acquired employ about 658 people.
Colorpak has also entered into agreements with entities in the Rank Group for the supply of folding carton board and corrugated shippers in both Australia and New Zealand.
Under the agreement, Colorpak will source much of its folding carton board from the Whakatane mill, which is ultimately owned by Rank Group.
Colorpak managing director, Alex Commins, said the acquisition was a defining event for his company.
The deal does not include Carter Holt Harvey's Smithfield operation in New South Wales, which will be sold to another industry participant.
The transaction is expected to complete in March or April when the sale of the Smithfield business will simultaneously complete.
Adjusted for Smithfield's exclusion, the transaction will increase Colorpak's sales by around AU$125m to around AU$210m in 2012.
The current earnings before interest, tax depreciation and amortisation for the businesses being acquired is AU$4 million.
A two year integration programme is envisaged.
NZPA