British Polythene Industries (BPI) has signed an agreement to sell its subsidiary BPI China (formerly Xinhui Alida) to Amcor (China) Investment Company, a subsidiary of Amcor, the Australian based packaging group.
The deal is worth an initial payment to BPI of £6.4m, with another £3m over 12 months, based on post-completion arrangements.
The disposal is subject to the approval of the Chinese authorities and is expected to complete in the second quarter of 2016.
BPI's PRC subsidiary was established in 1993 to produce low-cost carrier bags for the UK retail market. After selling the retail carrier bag business in 2002, BPI China diversified into other products for the UK market. Latterly the group invested in high-quality printing and conversion equipment to supply the Australasian market but progress has been slower than expected, the firm said.
Total sales of the business, including sales to BPI in the UK of £5.5m, were £9.1m in the year to 31 December 2014 with an operating loss of £700,000.
Audited results for the year ended 31 December 2015 have yet to be finalised but the business was expected to break even for that period on sales of £9.6m, of which £6.1m worth is to BPI in the UK.
BPI will announce its preliminary results for the year to 31 December 2015 on 29 February 2016.