Morrison has agreed to acquire a 50% interest in a Crate Pooling business from Pact Group (‘Pact’). The business is a vertically integrated provider of reusable plastic crate (‘RPC’) pooling services to producers and grocery retailers across Australia and New Zealand.
The new strategic partnership will operate as an independent entity, with Pact retaining a 50% interest and continuing to provide industry-leading capability to drive the next phase of growth. The investment by Morrison values the Crate Pooling business at an approximate Enterprise Value of A$380 million.
This partnership brings together the expertise and resources of two pioneers in their respective sectors, who share commitments to delivering improved sustainability practices for local communities.
The business operates a network of wash and distribution facilities for RPCs used by retailers in Australia and New Zealand in their fresh produce supply chains. It manufactures and recycles the RPCs at its facilities in Australia.
Mark Mudie, Partner at Morrison, said, “This is an attractive opportunity for our clients to gain exposure to the circular economy thematic, which aims to eliminate waste by keeping products and materials in use for as long as possible. We believe the circular economy can tackle some of our greatest social and environmental challenges, while unlocking economic value for our investors.”
RPCs are 100% reusable and recyclable. Each individual crate replaces up to 140 units of single use packaging. RPCs deliver economic and sustainability benefits that are driving their adoption across fresh grocery supply chains.
Pact CEO and Managing Director Sanjay Dayal said, “We’ve been seeing increased demand from customers for a rapid scale up of our Crate Pooling offering as they look to operate more efficiently and sustainably in the circular economy. This new strategic partnership with Morrison & Co is a great outcome for our customers as it will accelerate the growth of the business and offer an expanded range of products and services, with Pact sharing in the upside.”
The Crate Pooling business holds long-term contracts with high quality counterparties. Last month, Woolworths Group extended its plastic crate pooling contract with Pact. This contract was originally announced in 2016 and has now been extended for a further 10 years. The contract currently generates more than A$50 million per annum. A long-term contract extension was recently negotiated with ALDI Australia.
This investment will be made on behalf of the Morrison Growth Infrastructure Fund (‘MGIF’), which achieved a final close in August 2020.
Completion of the agreement is expected later this year, subject to the satisfaction of customary conditions and approvals.
Ends.
About Pact Group
Pact Group is an Australian-based integrated plastic recycling, reuse and packaging manufacturing company that employs more than 6000 people globally, including approximately 3000 people across 60 facilities throughout Australia and New Zealand. Pact is investing in infrastructure to create a strong local circular economy that diverts plastic waste materials from landfill to recycle and reuse in value-add products that reduce the consumption of newly made materials.