Billionaire Pratt family member Raphael Geminder's Pact Group has agreed to buy Barry Smorgon's Jalco for about $80 million.
The sale comes after sources close to Pact told the Australian Financial Review's Street Talk column this month the company was in talks to buy Jalco, a fast-moving consumer goods manufacturer, for $150 million.
Pact, which Mr Geminder controls, said in a statement to the ASX on Wednesday the $80 million price tag represented a multiple of 6.5 times earnings before interest, tax, depreciation and amortisation.
The company said it expected the acquisition of Jalco to be "immediately earnings-per-share accretive and to generate a return on investment in excess of 20 per cent within three years".
"We are extremely excited about the Jalco acquisition, an adjacent and highly complementary business to the Pact Group enterprise," Pact Group chief executive Brian Cridland said.
"We have been a supplier to Jalco for many years, we understand the business and I am delighted to see these two businesses come together. Jalco is an ideal strategic fit as it will allow us to deepen our existing FMCG customer relationships and to enter new areas of growth serving customers in outsourced contract manufacturing and packaging."
The acquisition will be funded through Pact's existing debt facilities. Jalco, established in 1973, manufactures goods for leading companies and brands such as Unilever, Energizer and Castrol.
It operates at six sites in NSW, employing about 500 people, and has trailing annual sales of about $165 million.
Mr Cridland said Pact was "committed to a program of sustained investment in the Jalco business to better serve our customers and enhance their competitive capabilities".
"I am also delighted to welcome the Jalco team to the Pact family and, most importantly, we look forward to continuing to partner and supply our customers with innovative, high-quality, locally produced, world-class solutions".
The sale is expected to be completed by September 1. Pact shares were flat at $4.45 on Wednesday.