CCL Industries has signed a binding agreement to acquire a 50 percent interest in Pacman-CCL, a privately owned group of label companies based in Dubai, in the United Arab Emirates, with additional operations in Cairo, Egypt and Muscat, Oman. Pacman-CCL has been a license holder of CCL Label since 2009. The remaining 50 percent interest in the venture will continue to be held by Ali Saeed Juma Albwardy, who, through his holding entity Albwardy Investment, has overseen the growth of the company for more than two decades.
CCL Industries will pay $18.5 million in cash to acquire its interest in the venture. Pacman-CCL generated sales of $25.8 million in the year ending December 31, 2010, with net after tax earnings of approximately $4.6 million. Closing of this transaction is expected to occur this summer after certain administrative procedures are completed. The venture is expected to have a small net cash position on closing. The agreement also binds CCL and Albwardy to complete an investment in a new facility currently under construction in Jeddah, Saudi Arabia, in 2011 with an estimated total cost of $4 million, to be funded by a combination of debt and additional equity in the new operation shared equally by the parties. CCL expects its own equity contribution to be funded by dividends from the venture in its first year. The partners have also agreed in principle to a prospective future greenfield investment by Pacman-CCL in India.
“We have enjoyed a great relationship with John Dawson, managing director of Pacman-CCL, and his team since we began the license arrangement in 2009,” says Geoffrey Martin, president and CEO of CCL Industries. “The two companies share many common customers, technologies and business partners, so this was a logical next step for both of us. We are especially proud to enter into a new partnership with Ali Albwardy as he is clearly one of the most highly regarded business leaders in this part of the world. The new venture continues to build on our strategy to invest in the world's emerging markets that are so important for many of our consumer product customers.”
Headquartered in Toronto, Canada, CCL Industries now employs approximately 5,800 people and operates 61 production facilities globally. CCL Label is the world’s largest converter of pressure sensitive and film materials and sells to global customers in the consumer packaging, healthcare, and consumer durable segments. CCL Container and CCL Tube produce aluminum cans, bottles and plastic tubes for the consumer products industry in North America.