Street Talk can reveal Pact is taking a handful of potential suitors through a round of highly confidential due diligence, including site trips and meetings with key executives, to see whether any would be willing to pay a high price for the pooling business.
Investment bank Citi has been helping with the talks, sources said, and pitched the business as a high-margin, infrastructure-like division that could be a valuable bolt on to the likes of Brambles or Loscam or attract a private capital buyer. Selling the unit, or a stake in it, would be Pact saying farewell to arguably its most valuable asset. The division is cash generative and typically runs at a 20 per cent to 25 per cent EBITDA margin, which is more than Pact’s core packaging arm or its contract manufacturing unit.as recently as last year.
It comes as Pact could use an injection of funds. The group reported $633 million net debt at December 31 and gearing at 3.2 times , up from 2.7 times.