FPM comprises Future Packaging and Machinery, Future Packaging and Machinery Cape and Future Packaging and Machinery KwaZulu-Natal.
It was established in the early 1990s and operates as a supplier of industrial and general packaging products, including the outsourcing of packaging services.
FPM markets its products nationally through three major distribution centres in Joburg, Cape Town and Durban and two smaller depots in Bloemfontein and Mbombela.
Transpaco said yesterday the transaction would be effective from February 28, but it was subject to terms and conditions.
It would be financing the transaction through a combination of existing facilities and cash resources, with the maximum estimated purchase consideration dependent on the final values to be determined after the finalisation of FPM’s audited financial statements to end in February.
Transpaco added that the purchase consideration for FPM included a premium of R37.2m to the book value of the net assets being acquired in terms of the transaction.
Explaining the rationale for the acquisition, Transpaco said FPM had achieved consistent growth in sales and profitability since its inception and Transpaco was seeking to access the large customer base that FPM serviced, while its extensive product range would add to its offering.
Transpaco said FPM was an attractive target business prospect for the group to expand its business because it satisfied all the criteria in Transpaco’s expansion strategy.
These included a good track record of being highly profitable and cash generative; products and services that were well known and understood by Transpaco; an experienced and self-sufficient management team, with the senior management having on average more than 30 years’ experience in the business; while the growth prospects were strong.
Transpaco said the acquisition also had a number of attractive features and benefits for the group.
These included impressive distribution facilities, operating efficient packaging-supply services with sound standard operating procedures; scalable business model that allowed for significant growth through sales and marketing expansion, without excessive capital expenditure requirements; and anticipated earnings' enhancement.
Shares in Transpaco dropped 1.08percent on the JSE yesterday to close at R22.
- BUSINESS REPORT