Close the Loop Group (ASX:CLG) has acquired thermal paper supplier and sustainable paper products group, Alliance Paper for a total purchase price of $1 and an investment in working capital of approximately $4.5 million.
Alliance Paper is one of the largest and longest-serving supplier and converter of paper roll products in the Australian market offering a range of BPA and phenol-free thermal receipt rolls and other paper products which are recyclable.
It supplies Australian supermarkets as well as several brands including KFC, McDonalds, Nike and Bank of Queensland.
Close the Loop Group said the acquisition furthers its strong position in the sustainable paper product sector while also allowing the company to develop new sustainable paper products that can replace some traditional plastic packaging, based on technologies that Alliance has developed and has been trialled successfully by its OF Flexo business.
Alliance Paper has also developed sustainable paper products such as recyclable coffee cups, disposable and recyclable eskys.
The deal is expected to enhance Close the Loop’s revenue and profitability levels in FY23, with Alliance expected to grow revenues to $19.7million in FY23 from $11.7million in FY22 and EBITDA to $2.4million in FY23 from a loss inFY22.
Details of the Acquisition
- Assets purchased: 100 per cent of Alliance Paper Pty Ltd
- Purchase price: $1payable at settlement on 31 August 2022
- Working Capital: $4.5 million investment in working capital to be made at settlement date and beyond
- Funding: cash and bank debt
- Net Assets of $4.88 million at 30 June 2022
- Management remains after the acquisition.
Close the Loop Group CEO Joe Foster said, “We are thrilled to acquire Alliance as it further strengthens our position in the lucrative thermal paper and paper products sector and provides us with a highly complementary market space and product suite to our existing packaging offering.
“It will allow us to replace some traditional plastic packaging with a paper-based solution based on technologies that Alliance has developed and have been trialled successfully by OF Flexo.
“Alliance offers strong sales growth and profitability levels, significant cost synergies and a diverse suite of well-established and loyal clients. The acquisition delivers on our strategy of growth via acquisition and further expansion within the niche packaging sector.
“The combination of Alliance’s expertise in paper products and our leadership in the global circular economy for packaging will increase our capability to reduce the amount of waste that ends up in landfill and is instead recycled into new products.”
Alliance Paper managing director Jon Williams said, “Alliance Paper has a proud 38-year history as a leader in the domestic paper market. We have driven the adoption of chemical-free and safer consumer products in the paper and packaging space and most recently, we pioneered the commercial strategy and adoption of BPA-free thermal paper across the Australian market.
“For us, true circular integration requires a broad and complete approach and to be part of Close the Loop’s industry-leading solution is an opportunity to deliver real change. The capacity to develop and deliver chemical-free paper packaging solutions manufactured with the same organisation that can manage the waste stream for the same post-consumer use items is a rewarding and exciting next step for our organisation.”