Essel Propack, a manufacturer of laminated and seamless or extruded plastic tubes, has acquired 75.1% stake it did not own in its European joint venture Essel Deutschland Germany (EDG), it said on Wednesday.
Essel held 24.9% stake in EDG and with this transaction, the German unit will become its wholly owned business.
Essel said that EDG, which manufactures laminated tubes mainly for the cosmetic and food industries across Europe, has an enterprise value of $32 million. EDG posted net sales of $40 million in FY16.
“The acquisition of EDG will further enhance our position in the non-oral care category. This move is in keeping with our overall plans for achieving revenue growth of 15% and PAT growth of 20% and achieving our Mission 20:20:20,” Ashok Goel, managing director of Essel Propack, said.
Essel Propack is aiming an EBITDA margin of 20%, return on equity (ROE) at 20% and return on capital employed (ROCE) at 20% within the next two years. It recorded consolidated revenues of Rs 2,184 crore last financial year. This deal would boost its consolidated revenues by 11%.
The company believes the move will also help it sell its high decoration laminated tube solutions for the premium non-oral care brands across Europe, including Germany, besides sourcing flexibility and better capacity utilisation at all of its plants in the geography.
Mumbai firm Essel Propack (formerly Essel Packaging Ltd), a part of $2.4 billion Essel Group, manufactures laminated plastic tubes. The company caters to beauty & cosmetics, pharma & health and food categories globally. It has more than 2,800 employees in 25 countries and sells over 6 billion tubes every year.
The firm, which claims to have a market share of 36% in volume terms for oral care packaging category globally, has units operating across countries such as the US, Mexico, Colombia, Poland, Germany, Egypt, Russia, China, Philippines and India.
The company had last year received its board approval to divest entire stake in its flexible packaging subsidiary Packaging India Pvt. Ltd, to Amcor Flexibles India Pvt. Ltd, a wholly-owned subsidiary of Australian packaging products maker Amcor.
The packaging space in the country has witnessed several deals this year. In July, Finnish packaging company Huhtamaki Oyj acquired a 51% stake in Valpack Solutions Pvt. Ltd, a privately held paper cup manufacturer based in Mumbai.
Prior to that, Freshee, a Mumbai-based manufacturer of household packaging and storage products, raised an undisclosed amount in growth capital from Edelweiss Private Equity, a unit of Edelweiss Financial Services Ltd.
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