Founder-led urban miner, packaging innovator Close the Loop makes $5.8m US acquisition

Founder-led urban miner, packaging innovator Close the Loop makes $5.8m US acquisition

Photo: Close the Loop, via Facebook.

With its shares up 48 per cent since a December 2021 merger and ASX listing, a Melbourne-based end-to-end recycling solutions and product development group continues its acquisitive run with the purchase of US company In-Plas Recycling for US$4 million ($5.8 million).

Close the Loop Group (ASX: CLG), formed through the merger of the world's largest take-back provider of ink and toner cartridges Close the Loop and fellow Victorian outfit O F Packaging, has been on a roll over the past year with revenue up 162 per cent to reach $170 million in FY22.

With 260,000 global collection points for hard-to-recycle materials like printer cartridges, e-waste, cosmetics and soft plastics, and a variety of products developed by O F Packaging such as asphalt additive TonerPlas, the group notched an 8 per cent rise in profit in FY22 to $4.6 million.

The group has been steadily building up its network of companies to reinforce its supply chain position from collection to recycling to design to manufacturing, including acquisitions of Queensland-headquartered seafood bulk commercial packaging provider Oceanic Agencies, Australian bulk packaging business Crasti & Company, and thermal paper and paper products group, Alliance Paper.

Now with a market capitalisation of around $129 million, the group has reported momentum in the US market as trading conditions rebounded strongly in FY22 with collection volumes exceeding pre-COVID levels, while Europe continues to track ahead of budget.

It is against this backdrop that Close the Loop announced today it would be acquiring Ohio-based In-Plas Recylcing, a well-established, profitable recycler and processor of post-industrial scrap, pellets, regrind and by-products, as well as recovered plastics. The company works with a variety of thermoplastics and operates across multiple sectors including automotive, manufacturing and pharmaceutical. 

The US$4 million purchase price includes US$500,000 worth of inventory, with US$3 million payable at completion at the end of this month and a further US$250,000 payable per annum over four years, all funded by existing cash and bank debt.

"We are pleased to be entering additional markets via the acquisition of In-Plas Recycling. The acquisition significantly expands our recycling scope and capabilities in North America as well as our presence on the plastics commodities market," says CEO Joe Foster, who alongside COO Darren Brits is a co-founder of O F Packaging.

"In-Plas Recycling not only gives us ownership of a US-based recycler and processer but provides strong sales growth, profitability and delivers a diverse suite of well-established and loyal clients."

Foster added the synergies between both companies would lead to considerable opportunities for growth.

"A senior member of our US management team has prior experience working with In-Plas, and both companies’ complementary services mean we are able to combine innovative solutions to turn waste polymer-based materials into valuable new products for more sectors," he said.

The acquisition is expected to add US$1.1 million ($1.6 million) to Close the Loop Group's s EBITDA on an annualised basis.

Close the Loop in its pre-merger form was founded by circular economy pioneer Steve Morriss in 2000.

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