DGL Group (ASX:DGL)
has announced the acquisition of digital label printing business Labels Connect. DGL, based in Auckland, New Zealand, is a specialist chemicals business that manufactures, transports, stores and processes chemicals and hazardous waste.
Labels Connect is the main supplier of packaging labels to DGL’s Chem Pack business, which produces around 10 million products and packages per annum, including imported products, which require new labels for the Australian and New Zealand markets. Labels Connect is based in Victoria, providing small- to medium-size brands and businesses, primarily in the Crop Protection & Home and Garden markets, with custom digital-printed self-adhesive labels.
Labels Connect currently produces one million labels per month and DGL is its main customer, at around 70 per cent of its revenue.The acquisition was made at three times earnings, and the purchase consideration comprises a cash payment of $550,000.00 and the issue of 909,090 fully paid ordinary shares in DGL at $1.10 per share.
Founder and CEO of DGL, Simon Henry, said: “This acquisition is an important step in delivering on our vision of becoming a leading, full service, vertically integrated chemical management company across New Zealand and Australia. The small but highly strategic acquisition will remove a bottleneck in the delivery of chemicals to our customers and allow us to improve turnaround times. What we are often finding is that the production of labels doesn’t always align with our distribution times, and this slows the delivery timetable for our customers. Owning our primary labels supplier will solve this roadblock, resulting in more control over the timetable and improved outcomes for our customers.”
Shares in DGL Group (ASX:DGL)
are trading 1.08 per cent higher at $1.40 .