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Ann: Intention to Make Takeover Bid, page-207

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24/10/23

13:12

Post #: 70505362
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Originally posted by williamteddy: ↑

Takeover target Pact cuts 175 jobs, pursues asset sales

Takeover targetPact Grouphas axed 175 jobs, put a Victorian business up for sale and is weighing up whether to proceed with a renewed attempt at selling its entire contract manufacturing business valued at close to $130 million.

The company’s second-largest shareholder, IML, continues to be scathing about the price of a buyout offer pitched by its major backer,Rich Lister Raphael Geminder,whose Kin Group in mid-September launched a 68¢-a-share bid at a time when the stock was trading at 67.5¢.

Kin Group is making slow progress gaining acceptances and its latest filing to the ASX showed that at October 18, it owned 50.22 per cent of Pact, compared with 50.02 per cent at the start of the offer.

IML holds about 6 per cent of Pact. Portfolio manager Simon Conn said the very slow rate of acceptances of the Kin Group bid reflected the large gulf between the $1.06 to $1.51 range at which independent expert Kroll Australia valued the shares, and the offer price of 68¢. The shares closed on Friday at 72.5¢.

“There’s a big gap and I can’t see why shareholders would accept,” Mr Conn said.

Mr Conn also said a $20 million cost-cutting program at Pact had not been fully factored in by the market.

An independent board committee, led by director Michael Wachtel, on October 13 told the remaining shareholders to reject the 68¢ a share offermade by Mr Geminderbecause it was “neither fair nor reasonable”. The offer is scheduled to close on November 8.

Pact chief executive Sanjay Dayal is in the final stages of a $20 million cost-cutting drive. About 175 staff were made redundant in Australia and New Zealand in August and September. The job losses were in administrative and back-office positions.

Pact is also in early-stage negotiations for the sale of a Melbourne-based business, Viscount Rotation Mouldings, based in Carrum Downs. It employs 54 people and manufactures plastic infrastructure products such as underground pits for telecommunications and electric cables, along with noise walls and water tanks. Industry players suggest it may fetch about $25 million.

Pact also intends putting its contract manufacturing business up for sale soon. Kroll outlined in its report that “subject to board approval Pact intends to recommence a sale process for the contract manufacturing segment” in calendar 2023. It first tried to sell the unit in 2020 and finally ended that stop-start process in late 2021.

The contract manufacturing division is made up of three main businesses, Jalco, Pascoe’s and Australian Pharmaceutical Manufacturing. It produces a range of products including containers for vitamins, body wash, laundry liquids, and car care products.

Kroll outlined that the contract manufacturing division generated revenues of $357 million in 2022-23, up from $306 million the previous year. Revenues for the business soared to $394 million in 2019-20 when it experienced huge demand for hand sanitiser at the beginning of the COVID-19 pandemic.

Kroll put a value of between $113 million to $127 million on the contract manufacturing division, which produced underlying earnings before interest and tax of $3.3 million in 2022-23, but made a loss of $4 million a year earlier.

Kroll in its report assessed the contract manufacturing division as having “maintainable revenue” of $380 million annually, and a “maintainable” EBITDA margin of 7.6 per cent. It was 4 per cent in 2022-23.

Mr Geminder’s Kin Group has investments across retail, packaging and property, including a 20 per cent stake in discount retailerThe Reject Shop,66 per cent of Pro-Pac Packaging, and a 4.5 per cent stake in skincare and make-up distributor McPhersons.

Pact’s origins date back to 2002 after Mr Geminder engineered the management buyout of several underperforming assets from the billionaire Pratt family’s Visy Industries.

Source: AFR

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The comment from IML says it all “ WAY TO CHEAP” but we all knew that anyway, hold them tight fellow shareholders.

PGH Price at posting: 73.5¢ Sentiment: Hold Disclosure: Held
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Last 82.0¢		Change 0.000(0.00%)		Mkt cap ! $282.3M

Open	High	Low	Value	Volume
0.0¢	0.0¢	0.0¢	$0	0

Buyers (Bids)

No.	Vol.	Price($)
1	4	82.5¢

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Price($)	Vol.	No.
83.5¢	2376	1

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No.	Vol.	Price($)
1	11918	0.820
2	20637	0.815
1	8922	0.810
1	4803	0.805
2	1379	0.800

Price($)	Vol.	No.
0.835	2376	1
0.845	8876	2
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