Hellaby Holdings, the NZX-listed diversified investment company, has sold its packaging division to Coveris, one of the world's largest plastic packaging and coatings companies.
Hellaby's packaging division comprises Elldex Packaging and Elldex Packaging Australia and employs 125 people who are all expected to retain their jobs under the deal.
The enterprise value of the sale is about $30 million, including the carrying value for transaction costs and will be used to reduce debt. Hellaby's debt sat at $79 million as at December 31, 2014.
Managing director John Williamson, who is due to leave the company in October, said the company also spent $25 million last week acquiring two businesses - Waikato-based Diesel & Machinery Services and Melbourne-based JAS Oceania.
Hellaby owns a portfolio of 15 industrial, distribution and retail businesses.
"This nicely balances those acquisitions out," he said.
Williamson said Elldex had been a good investment for Hellaby since its acquisition in 2005 and it had committed to building a food-grade manufacturing facility in Christchurch which is due for completion later this year.
"It was this new plant that attracted the attention of Coveris, which has been seeking an entry point into Australasia. While Elldex was not actually for sale, we have been approached by other interested parties in recent times," he said.
"This Coveris opportunity created a win-win situation, and we believe that Coveris will be an excellent long-term owner for Elldex and its people."
Hellaby shares rose 1.4 per cent to $3.01, and have declined 5.7 per cent this year.
The stock is rated an average 'buy' based on four analyst recommendations compiled by Reuters, with a median price target of $3.60.
The company changed its dividend payout policy last December, boosting the payout to 75 per cent of net profit from the previous ratio of 50 percent.