Joint Venture for CCL in Middle East and India
TORONTO, Ontario—CCL Industries Inc. announced that it 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 Mr. 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 US$18.5 million in cash to acquire its 50 percent interest in the venture. Pacman-CCL generated sales of US$25.8 million in the year ending December 31, 2010, with net after tax earnings of approximately US$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 US$4.0 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.
Geoffrey Martin, president and CEO of CCL Industries said, “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. 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 Mr. 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.”