CCL Label plans to use the new business as an entry platform for all product lines in Turkey and will relocate operations to a new plant to facilitate the expansion. In Japan, CCL Label acquired the assets of Kadomise, a small producer of pressure sensitive labels based in Shikoku which will be combined with an existing operation in the country. In a similar transaction, CCL Label Australia acquired the Hunter Valley, New South Wales wine label customers of Labelcraft Pty Ltd which will be integr ated into the recently commissioned new facility in Sydney.
Initial combined consideration for these three transactions amounted to $6 million and together the businesses are expected to add approximately $12 million in sales and at least $1.5 million EBITDA ("earnings before interest, taxes, depreciation and amortization") in their first full year. The transaction in Turkey includes a contingent consideration payable in 2017 subject to EBITDA improvement averaged over the first three years of the venture. A similar arrangement is in place for the Australian transaction payable in early 2015, subject to the degree of customer retention in the current year. These contingent considerations are entirely performance-driven and therefore should not materially impact the entry purchase price multiple based on the trailing EBITDA at the time of any payment.
CCL has also confirmed the closing of its previously announced agreement to acquire Sancoa & TubeDec, privately owned producers of labels and tubes for Home & Personal Care customers in North America. The new business unit will trade with immediate effect as "CCL Label TubeDec" and will be part of the global CCL Label Home & Personal sector headed by Ben Rubino, president.
Geoffrey T. Martin, president & CEO of CCL Industries Inc., comments, "We are pleased to report on further international expansion, adding and developing important geography and continuing to build our fast growing CCL Label Food & Beverage sector headed by Guenther Birkner, President. In North America, we expect to find significant cost, innovation and procurement synergies at Sancoa & TubeDec through its combination with existing CCL Label Home & Personal Care operations. For 2016, we plan to improve EBITDA from the acquired revenue stream by approximately $5 million. Over the intervening period the Company expects to incur approximately $4 million of integration costs including transaction expenses from the acquisition process."