Packaging product manufacturer Pro-Pac Packaging (ASX:PPG) plans to acquire a Sydney-based safety product distributor.
Pro-Pac will purchase Medirite Australia, an importer of personal protection equipment (PPE) and safety products with a focus on industrial hand protection.
Medirite mainly serves the food, pharmaeceutical and medical industries, and has an annualised turnover of around $6 million.
Announcing the deal, Pro-Pac said the business complements its existing PPE and safety product business.
The acquired benefits will stretch beyond Medirite's existing product portfolio, according to CEO Brandon Penn, to also include “enhanced product sourcing capabilities and an experienced... management team to drive growth of the PPE and safety category.”
While the exact terms of the transaction were not disclosed, it will involve the issue of 750,000 PPG shares at 45 cents per share. The remainder of the purchase price will be paid for from existing cash reserves and debt facilities.
Pro-Pac reported a decrease in net profit to $5 million from $5.1 million in FY11, but said that barring costs associated with consolidating a division's operations, profit would have grown to $5.3 million.
Difficult trading conditions stemming from subdued consumer spending and the “challenging” broader economic environment hampered further growth, the company's preliminary final report states.
PPG shares stayed flat on Friday at $0.310.