The wide-ranging interests of Pact Group – which has around 10 subsidiaries operating across a number of sectors – means there are numerous issues to consider, said the Australian Competition and Consumer Commission (ACCC).
Pact is bidding to acquire a 100% share of Viscount. This is its third attempt to buyout the firm, after the abandonment of two previous efforts in 2008 and 2009. Pact’s product portfolio includes rigid plastic food containers, bottles jars, tubes, trays and closures, which it operates through its subsidiaries.
Viscount Plastics is owned by UK-based Linpac and covers packaging, the supply chain and logistics sectors. It has operations in Australia, New Zealand, China and Malaysia.
The ACC said it thought the firm would continue to operate if the merger was not approved but acknowledged that the private equity outfit in control of parent company Linpac, may cut off its cash supply.
The ACC also highlighted Visy Industries Australia – a packaging and recycling outfit - as its owners are linked by marriage to the businessman who controls Pact. Visy makes PET food and beverage containers and cans, as well as paperboard and corrugated packaging.
National Cans Industries is also mentioned as it is a Pact subsidiary. Pact, Visy and National Can compete across a number of segments, including the manufacture and supply of PET bottles and plastic pails.
With or without
In scrutinizing its options, the ACCC said it must use a ‘with/without test’ – to gauge the competitiveness of the sector depending on whether the takeover goes ahead or not.
The body believed it likely that Viscount would continue to operate as a separate company – either under current or new ownership - if the acquisition was prevented. But it acknowledged the potential financially precarious position of the firm.
It said: “The ACCC recognizes that if Viscount remains under current ownership, there is uncertainty regarding the level of ongoing capital funding that Viscount will receive from the banking consortium currently controlling Linpac.”
PET supply
The body is examining whether the deal would distort competition for the supply of plastic pails used to store and transport food.
It is also looking at whether PET bottle supply in Western Australia would be affected by the deal as Pact, Visy and Viscount are the only supplier of the material to third party customers in the region – with the Pact’s share seen as “minimal”.
The ACCC and whether it would “remove or mute“ the competition that exists between the independent suppliers given the historical links between Pact and Western Australia PET market leader Visy.
The body has asked for comments on the extent to which PET bottle pricing is determined nationally and the relative quantities of PET bottles purchased by national and local customers.
It is also asking for feedback on the ability of PET bottle customers to acquire PET bottles from interstate plants in response to an increase in the price of locally produced material.
Deadline for comments is 15 December, with the ACCC due to make a decision by 19 January 2012.