Leonard Green & Partners Finalizing US$2.2 Bn Deal to Acquire Pro Mach


Published Date : Jan 29, 2018

The packaging industry is witnessing exciting changes, fueled by a spate of strategic deals undertaken by buyout firms in various developed regions. Private equity firms are fervently investing multi-million dollars in acquiring packaging companies catering to a wide spectrum of end-use industries, including food and beverages, pharmaceuticals, and household goods. In particular, interests to acquire food packaging companies have soared in recent years. Leonard Green & Partners LP, a U.S.-based private equity investment firm is on the verge of finalizing a deal to acquire Pro Mach Group Inc., Kentucky-based packaging machinery company from AEA Investors LP, a well-renowned middle market private equity firms. The estimated deal is valued at US$2.2 billion, including the debt.

Of note, Leonard Green & Partners has acquired Charter NEX Films in April 2017, a manufacturer of specialty films catering to the food and medical industries based in the U.S., the valuation of which was pegged at US$1.5 billion, including the debt.

High Acquisition Prices Fueled by Large Appetite of Buyout Firms in Food Packaging Industries

Providers of packaging solutions, notably for the food industry, have been the cynosure of attention of buyout firms, who are ready to pay huge prices for the acquisition. For instance, in the present scenario, according to sources related with the deal, the Los Angeles-based private equity firm has sought to pay AEA investors a sum covering around 15 times the packaging company’s earnings before interest, taxes, depreciation, and amortization (EBITDA), calculated for 12 months.

According to several industry experts, the estimated pricing for the deal is noteworthy, but in line with the perspective that the food packaging companies are witnessing a remarkable appetite for growth, especially at times of temporary bottlenecks in economic activities in various parts of the world.

Of note, AEA has acquired the U.S.-based company offering packaging and processing products solutions from the Jordan Company, a private equity firm specializing in leveraged buyout investments, in 2014.