A private equity group in Sydney has allegedly been in talks with industrial supplies company, Pact Group (ASX:PGH), to acquire it contract manufacturing division, according to The Australian.

It was described in the article that the talks have been ongoing since end 2020 with this potential buyer.

Pact Group put its manufacturing division up for sale about a year ago through Citi, with analysts previously estimating the division to be worth between $120 million and $140 million.

In its recent FY2020 results, Pact Group reported $1.809 billion in revenue, down 1.4 per cent from the previous corresponding period for its 2020 full year results, with a statutory net profit after tax of $89 million for the year ending 30 June 2020.

Its EBITDA was reported to be $301.8 million, up from the $230.7 million it reported in the previous corresponding period.

Within its contract manufacturing services business, EBITDA was recorded at $48 million in FY20, from $25 million the same time last year. Pact Group said this was because of higher sales volumes in the hygiene category as a result of increased demands for these products.

Pact Group CEO and managing director Sanjay Dayal previously said the company delivered improved earnings and margins and has strengthened its balance sheet in FY20.

“These results, delivered in a period where we faced the uncertainty of COVID-19, and the challenges of other macro events, illustrates the resilience of our portfolio, and our discipline in managing cash and protecting our balance sheet,” he said.

“I am proud of how well the company responded to the challenges of COVID-19 and the commitment demonstrated by our people… Our diversified portfolio performed well.

“We are progressing well in the execution of our strategy to lead the circular economy. We have completed the critical first steps in the turnaround of our Australian packaging business and have clear plans for the next phase.”